Speak of the devil, so to speak

So just after my comment earlier today that regulators need to begin talking about new regulations to better shepherd the financial markets, Ben Bernanke, Chairman of the Federal Reserve, said, “…the time for such a longer-term discussion has come…”. Shazam!

What exactly did Bernanke propose? Well the details are a little thin at this point, but here is what has been stated:

• He focused on four things: systemically important and interconnected firms; financial infrastructure; regulation; and addressing systemic risks under one authority.
•  Regarding the big, interconnected firms he said that those firms that are “too big too fail” need to receive especially strong regulatory scrutiny
• He also proposed limiting the types of investments that money-market mutual funds could invest in. Another money market safety proposal was to create a limited form of insurance for money market mutual funds so that their net asset values could remain stable.

Bernanke suggested that in boom economic times that deposit-insurance funding would collect more money than in the past in order to pay for down economic times

The important thing here is not the detail of any plan, but simply that an entente has been made. Hopefully this move will lead to a public policy dialogue and effective regulations will be put into place. As all of you know, I feel the most important thing is the centralization of regulatory authority so that there is a single regulator that has full transparency into the financial system.

Let’s all pay attention over the next several days to see if these comments begin to spark a public debate. Keep them fingers crossed!

Jason