Ben Bernanke Talks About Regulation

Overhauling the financial system for the long-term

Today, Ben Bernanke, Chairman of the Federal Reserve, spoke to the Council on Foreign Relations. He addressed the state of the US economy, as well as the health of the financial system. And he made some very strong statements about the need for a complete overhaul of the regulatory system.

Rather than use the current system, which is a patchwork, he suggests overhauling regulations so that they work together at the local, state, federal and even international level. Douglas Roberts at BloggingStocks makes this observation about the wisdom of Bernanke’s remarks:

I believe that the issue of a total overhaul is extremely important. The current regulatory framework is a patchwork that has been pieced together over an extended period of time. If we just put another series of patches on the problem, it may cure it in the short term. However, it will not solve the underlying issue, which may result in an even larger crisis in the future.

Financial markets are in turmoil due to the lack of reasonable and effective oversight — especially in terms of behemoth financial institutions that are "too big to fail." Going forward, new policies need to be put into place in order to avoid an even bigger disaster down the road.