Democratic presidential candidate Barack Obama today called for a broad reform of financial institutions oversight, with greater authority to the U.S. central bank. The Federal Reserve should have basic supervisory authority over any institution to which it may make credit available as a lender of last resort. When the Fed steps in, it is providing lenders an insurance policy underwritten by the American taxpayer, Mr. Obama said in prepared remarks in a speech delivered in New York. The nature of regulation should depend on the degree and extent of the Feds exposure, Mr. Obama added. But at the very least, these new regulations should include liquidity and capital requirements.
Mr. Obamas remarks echoed a call made earlier this week by House Financial Services Committee Chairman Barney Frank, D-Mass., to consider establishing the Federal Reserve as a financial services risk regulator across markets. Calls for a broad reform of the U.S. financial system regulatory oversight have mounted following the demise of Bear Stearns Cos.
Earlier today, Senate Banking Committee Chairman Christopher Dodd, D-Conn., set April 3 as the date for a hearing on Bear Stearns. Treasury Secretary Henry Paulson, Fed Chairman Ben Bernanke and SEC Chairman Christopher Cox are being called to testify.