By TraderVox.com
He was giving a speech in Stone Mountain, Georgia. In his speech, he supported measures to increase the resiliency of forex market funds. This was in support of calls by Securities and Exchange Commission to require firms to maintain capital buffers or exchange shares at the market price rather than at 1 dollar fixed price. He also supported calls to monitor financial innovation and regulation of intraday credit in tri-part repo market.
During a regulatory overhaul in 2010, the Fed was given the mandate to safeguard stability by monitoring firms that would provoke turmoil in the financial were they to collapse. Bernanke highlighted that it has been 3 years since the “darkest days” of the US economy and indicated that the economy was far from pushing this situation in to oblivion. He said that the economy has not fully recovered and that these measures were necessary.
The Fed had indicated in a May 2010 Fed paper that an average of $2.8 trillion in securities had been financed during the 2008 tri-party transaction and during the first three months of 2010, the value of the securities had fallen to $1.7 trillion. During this period which saw the Lehman Brothers Holdings Inc. go bankrupt forced Bernanke to flood the financial system with liquidity opening facilities that could provide credit to money market funds, commercial paper market, primary dealers as well as mother dealers.
Bernanke has indicated the willingness of the Fed to guard against a decline in home prices to avoid another collapse of the house bubble witnessed previously. Bernanke said that the Consumer Financial protection Bureau will continue to provide additional protection to avoid similar events. The remarks by the Fed Chairman are have been construed as a way of Fed accounting for what it is doing to implement the Dodd-Frank Act.
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