FDIC Chair Bair: think before you point that finger…
The latest blame game circulating in Washington on financial regulation may end up with those who point fingers finding that they have three fingers pointing back.
During the debate on tightening financial regulations, there have been some backhanded jabs at regulators with the implication that perhaps they were asleep at the wheel. Just this morning on NBC’s “Today” show, Democratic Senator Claire McCaskill said Wall Street had been creating things just to bet on — “they were like the casino, but they had less regulation than Las Vegas.”
Well hold on. Who’s fault is that?
We asked Sheila Bair, chairman of the Federal Deposit Insurance Corp.
She said when it comes to regulating many of the complex over-the-counter derivatives, the blame actually fell into the lap of Congress which decided against putting them under the oversight of the SEC or CFTC or insurance regulators. And in fairness to Congress, the Federal Reserve and Treasury condoned that action, she said.
“On derivatives, Congress did that,” Bair said at the Reuters Global Financial Regulation Summit. “That’s all history now.”
The CFTC does regulate exchange-traded derivatives such as futures and options, but it’s the over-the-counter stuff that’s unregulated.
“There was a system-wide breakdown here,” Bair said. “Everybody had a role in this crisis and let’s just look forward and see if we can fix it.”
Photo credit: Reuters/Larry Downing (Bair at Reuters summit)