Thoughts Economic

I thought it was interesting to read about Federal Reserve Chairman Ben Bernanke speech last week. Here's the article in the Post.

He said:

that to help prevent future crises, firms considered "too big to fail" should receive close supervision from regulators.

Bernanke said that system-wide oversight, something known as "macroprudential regulation" is required, and that the Fed could be the home for that, or it could be another agency.

In macroprudential regulation, a government agency, or agencies, monitors an entire economy to look for possible bubbles and attempts to deflate them, rather than focusing tightly on individual sectors or firms.

I'm surprised it has taken this long for someone to address this question. I think a further question has to asked and that is why allow these institutions to get this big in the first place. It seems to me there has to be some sort of oversight by the government that takes into consideration the size of a financial institution. This is especially true when the institution gets big by buying up other banks or financial firms.

It will be interesting to see what the Obama administration does about this.