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

About The Tribune-Review
The Tribune-Review can be reached via e-mail or at 412-321-6460.
Contact Us | Video | Photo Reprints

By The Associated Press

Published: 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.

 

 
 


Show commenting policy

Most-Read Business Headlines

  1. Highmark’s insurance profit falls 40%
  2. Corbett: Coal is working
  3. Mastech Holdings records 51 percent profit jump in 1st quarter
  4. PNC’s CEO elected board chairman
  5. Drugmakers ready to carve out deals any way they can
  6. Earthquakes could affect Beaver Valley nuke plant more than first thought
  7. BNY Mellon notches $661M profit in 1st quarter
  8. McDonald’s profit slips amid weak sales
  9. ATI takes 1st-quarter loss, but says outlook is good
  10. ‘Old GM’ defense expected in court fight over faulty ignition switch
  11. AT&T joins crowded field with online video plans
Subscribe today! Click here for our subscription offers.