Former economic adviser weighs in behind Federal Reserve
Glenn Hubbard, former chairman of President George W Bush's Council of Economic Advisers, said the US Federal Reserve rather than an inter-agency council of regulators should oversee threats to the financial system, Reuters reports.
An inter-agency council of regulators would be inefficient, indecisive and compromising, said Hubbard, who now co-chairs the Committee on Capital Markets Regulation, an independent research organisation.
The heads of the Federal Deposit Insurance Corp and the Securities and Exchange Commission support an interagency council of regulators that pulls in the US Treasury, FDIC and SEC along with the Fed to keep an eye on system-wide risks.
The Financial Services Roundtable, which represents the largest financial services firms, supports the idea of giving the Fed the authority to monitor risk in the financial system.
Not the Office of Thrift Supervision
The FT’s Lex column dismissed the capabilities of the Office of Thrift Supervision to be the US’s new single regulator.
“The agency, which supervises about 1,260 thrifts and related holding companies, found itself overseeing AIG and, by its own admission, failed to spot the risks building in the insurer’s financial products unit. But allowing OTS to act as its consolidated regulator after AIG’s purchase of a tiny S&L was nonsense. Over the past decade financial institutions shopped around for favourable regulatory masters, leading to inadequate oversight by entities ill-suited for the task at hand,” the FT said.
