Bernanke: Fed is working to implement financial overhaul law

Bernanke: Fed moves ahead on financial revamp

WASHINGTON — The Federal Reserve is working closely with other regulators to implement the biggest overhaul of financial rules since the Great Depression, Fed Chairman Ben Bernanke said Wednesday.

The law, signed by President Barack Obama in July, beefs up government oversight of Wall Street, provides stronger protections for consumers and gives the Fed and other regulators new powers to clamp down on risky financial practices. It’s aimed at preventing another financial crisis like the one in 2007 to 2009 that plunged the country into a deep recession.

Bernanke provided the progress report in prepared testimony for a hearing Thursday at the Senate Banking Committee. The testimony was made available on Wednesday.

Specifically, the Fed is working with the Treasury Department to develop ways for regulators to best detect financial dangers that could hurt the economy. And, the Fed is helping Treasury identify companies that are so big and so interconnected that their failure could take down the entire financial system. Those companies — which are likely to include Wall Street firms, hedge funds and insurance companies — would be subject to tougher regulations.

At the same time, the Fed is transferring many of its consumer protection responsibilities to a new watchdog agency created by the law. The Bureau of Consumer Financial Protection is housed within the Fed and bankrolled by the Fed, but Bernanke has no authority over it.

All told, the Fed has identified 250 projects associated with the law. A new position was created to coordinate all those projects, Bernanke said.

To be more open, the Fed will post information on its web site information about its communications with banks, trade associations, academics, consumer groups and others regarding the writing of new rules under the law.