TribLIVE

| Business


 
Larger text Larger text Smaller text Smaller text | Order Photo Reprints

Federal Reserve will implement new tools to avert financial crises, Bernanke says

Email Newsletters

Click here to sign up for one of our email newsletters.

On the Grid

From the shale fields to the cooling towers, Trib Total Media covers the energy industry in Western Pennsylvania and beyond. For the latest news and views on gas, coal, electricity and more, check out On the Grid today.

By The Associated Press
Friday, Nov. 8, 2013, 7:27 p.m.
 

WASHINGTON — Chairman Ben Bernanke said Friday that the Federal Reserve is drafting rules to close large insolvent banks without bringing down the broader financial system, one of many steps regulators must take to prevent another financial crisis.

Bernanke said the absence of a process to deal with systemically important institutions in 2008 left regulators to deal with the “terrible choices of a bailout or allowing a potentially destabilizing collapse.” He spoke at a conference sponsored by the International Monetary Fund.

The financial overhaul law passed by Congress in 2010 gave regulators better tools to close down large financial institutions, he said. The Fed and other regulators are working to implement those rules now.

“Our continuing challenge is to make financial crises far less likely and, if they happen, far less costly,” he said.

At the IMF conference, Bernanke was asked about whether enormous growth in student loan debt could trigger a financial crisis. He said the debt is a drag on the economy but not a threat to the overall financial system.

Student loans prevented many Americans from buying homes or making other big-ticket purchases, he noted. But the bulk of the debt is backed by the federal government, so financial institutions would not be at risk from widespread defaults, he said.

Subscribe today! Click here for our subscription offers.

 

 


Show commenting policy

Most-Read Business Headlines

  1. Murray, Alpha notify West Virginia coal miners of layoffs
  2. Pa. sees widespread job gains; jobless rate holds at 5.3%
  3. Developer hopes to make Allegheny Center a tech hub
  4. Murray Energy expects to lay off as many as 1,800 more
  5. BNY Mellon promotes executive
  6. Home sales slipped in April on tight supply, high prices
  7. Equifax, Experian, TransUnion agree to improve fixing mistakes on credit reports, OK $6M settlement
  8. CVS to enter elder-care market with acquisition of drug distributor Omnicare
  9. Minorities lose out on lending, survey reports
  10. IRS refunds $10M to tax preparers who paid to take competency test
  11. Fewer Pittsburgh-area hospitals lost money last year, agency reports