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Phil Mattingly May 10, 2012 May 9 (Bloomberg) -- Former Federal Reserve Chairman Paul Volckerspeaks about financial market regulation and the Dodd-Frank Actrule bearing his name. He speaks before a Senate Bankingsubcommittee hearing in Washington. (Source: Bloomberg) .The Senate panel met to discuss risks posed to the by the size andinterconnectedness of financial firms. Lawmakers and regulatorshave been looking at ways to reduce risk in the financial systemsince the 2008 economic crisis, when Wall Street s largest banksrequired a $700 billion taxpayer bailout. Senator Sherrod Brown, the Ohio Democrat who leads the FinancialInstitutions subcommittee, introduced legislation today that wouldcap the size of banks, limiting to 10 percent the share of totaldeposits and total liabilities any one could hold. It also wouldlimit the size of non-deposit liabilities at banks to 2 percent ofU.S. gross domestic product. It s vital we take the necessary steps sooner rather than laterto end government policies that support and encourage large complexinstitutions, Brown said today. Previously Rejected Brown s bill is similar to an amendment he introduced in 2010during debate over what became the Dodd-Frank Act. That measure wasrejected in a Senate floor vote. Volcker, who spent much of the hearing answering questions abouthis intent for the proprietary trading ban, said while he wouldprefer a less concentrated banking system, he can live with thecurrent size of U.S. financial institutions. The former Fed chairman, who championed the proprietary trading banwhile serving as an adviser to President Barack Obama, said it isan important step to address conflicts of interest, as well as compensation practices and, more broadly, the culture of bankinginstitutions. The Volcker rule is intended to reduce the chances that banks willput federally insured depositors money at risk. Banks includingGoldman Sachs Group Inc. (GS), JPMorgan Chase & Co. (JPM) andMorgan Stanley (MS) have argued that it is so broad and poorlydefined it will force them to shed business lines and couldactually increase risks for their clients. I think they are making it overly complicated, Senator BobCorker, a Tennessee Republican, said today of regulators effortsto implement the rule. October Proposal The Fed, Securities and Exchange Commission and Federal DepositInsurance Corp. are among the regulators drafting the final rule.The initial 298-page proposal was released in October andcriticized by groups on both sides of the issue. Regulators lastmonth announced that banks would have a full two-year period toimplement the new rule, which is scheduled to go into effect onJuly 21. After his testimony, Volcker said lobbying against the rule wasplaying a role in adding to its complexity. What I would do is make clear what the purpose is, have a goodsense of metrics afterwards and make sure the management of thebank understood the purposes, he told reporters outside of thehearing room. They re not dummies and they know what proprietarytrading is, and their control systems reflect that. If that s allOK, then let them go at it and we ll review their activities expost. Money-Market Funds Volcker also said during the hearing that regulators shouldconsider structural changes to money-market funds and imposestronger capital requirements and oversight. Concern over money funds, once seen as among the safest ofinvestments, grew after the September 2008 collapse of the $62.5billion Reserve Primary Fund, which triggered a broader run thatcontributed to a freeze in global financial markets. The SECadopted rules in 2010 that introduced liquidity minimums, averagematurity limits and new disclosure requirements. Money-market funds have fought any additional regulation.Christopher Donahue, the chief executive officer of Pittsburgh-based Federated Investors Inc. (FII), the third-biggest U.S. money-fund provider, said Jan. 27 that his firm would sue the SEC if itwent forward with a proposed rule. We are high quality suppliers, our products such as Nicd Nimh Battery Charger , Mobile Phone Charger Recycling for oversee buyer. To know more, please visits Rechargeable Nimh Batteries.
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