Treasury considers new ways for Fed to use powers
By Gillian Tett in London and Krishna Guha in Washington
Published: April 29 2008 23:23 | Last updated: April 29 2008 23:23
The Federal Reserve could use proposed new regulatory powers to try to stop credit and asset market excesses from reaching the point where they threaten economic stability, the US Treasury said on Tuesday.
David Nason, assistant secretary for financial institutions, said the Fed could even use its proposed “macro-prudential” authority to order banks, hedge funds and other entities to curtail strategies that put financial stability at risk.
By “leaning against the wind” in this way, the US central bank could “attempt to prevent broad economic dislocations caused by potential excesses”, he said.
His comments come amid debate inside the Fed as to whether it should try to do more to contain asset price bubbles, following the housing and dotcom busts. Some see enhanced regulatory powers as a better tool for this than interest rates.
The proposed new powers – outlined in a Treasury blueprint published last month – require legislation and may never be authorised. But policymakers see the plan as offering a template for future regulation.
The blueprint envisages giving the Fed roving authority to collect, analyse and publish market data from a wide range of institutions, from banks to hedge funds.
“The market stability regulator must have access to detailed information about all types of financial institutions,” said Mr Nason.
Hedge funds are uneasy about this proposal. However, many European central bankers are eager to acquire the kind of macro-prudential powers the Treasury would like to give to the Fed.
Meanwhile, data showed accelerating US house price declines and further declines in consumer confidence.
Source
So what I'm wondering and perhaps someone here knows, have the Chinese already started "advising" Washington on its finances? It sure sounds like it. I'm sure this wouldn't be very public but the Chinese do technically, as the largest investor in the USA, have the right to start making demands. This move seems like a very Chinese solution and a move away from corporatism.
By Gillian Tett in London and Krishna Guha in Washington
Published: April 29 2008 23:23 | Last updated: April 29 2008 23:23
The Federal Reserve could use proposed new regulatory powers to try to stop credit and asset market excesses from reaching the point where they threaten economic stability, the US Treasury said on Tuesday.
David Nason, assistant secretary for financial institutions, said the Fed could even use its proposed “macro-prudential” authority to order banks, hedge funds and other entities to curtail strategies that put financial stability at risk.
By “leaning against the wind” in this way, the US central bank could “attempt to prevent broad economic dislocations caused by potential excesses”, he said.
His comments come amid debate inside the Fed as to whether it should try to do more to contain asset price bubbles, following the housing and dotcom busts. Some see enhanced regulatory powers as a better tool for this than interest rates.
The proposed new powers – outlined in a Treasury blueprint published last month – require legislation and may never be authorised. But policymakers see the plan as offering a template for future regulation.
The blueprint envisages giving the Fed roving authority to collect, analyse and publish market data from a wide range of institutions, from banks to hedge funds.
“The market stability regulator must have access to detailed information about all types of financial institutions,” said Mr Nason.
Hedge funds are uneasy about this proposal. However, many European central bankers are eager to acquire the kind of macro-prudential powers the Treasury would like to give to the Fed.
Meanwhile, data showed accelerating US house price declines and further declines in consumer confidence.
Source
So what I'm wondering and perhaps someone here knows, have the Chinese already started "advising" Washington on its finances? It sure sounds like it. I'm sure this wouldn't be very public but the Chinese do technically, as the largest investor in the USA, have the right to start making demands. This move seems like a very Chinese solution and a move away from corporatism.
