A top Federal Reserve policymaker expressed concern that financial reforms could make it harder for the central bank to stem a panic in credit markets, a warning that comes amid growing stress in corners of the banking sector.
Fed Vice Chairman Stanley Fischer on Friday said it was a “major” concern that the 2010 Dodd-Frank law required the Fed to disclose which banks had borrowed under a special facility designed to extend credit to banks otherwise shut out of lending markets.
The Fed previously released only aggregate figures for this program but now publishes a more detailed report with a two-year lag.
Fischer said the reporting requirements marked a “failure to resolve the problem of stigma – that is, the stigma of borrowing from the central bank at a time when the financial markets are on guard,” according to prepared remarks to a closed-door conference.
“Indeed, some of the Dodd-Frank Act reporting requirements may worsen the stigma problem,” Fischer said, adding that the new regulatory framework was still untested by crisis.
via Reuters
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.