Reply #6: Can A More Powerful Fed Really Help The Banks?

[ozymandius]

U.S. Federal Reserve Chairman Ben Bernanke called on lawmakers Tuesday to consider new rules to expand the central bank's authority over the financial markets, saying financial markets need to be more stable and resilient.

Of course, the financial companies themselves need to be more stable too, and so far no matter what the Fed and other regulators have done, they haven't been able to prevent negative sentiment from wreaking havoc.

Bernanke's speech, at a conference on mortgage lending sponsored by the Federal Deposit Insurance Corp. (FDIC), comes after global stock markets swooned over new fears that the credit crisis will deepen.

....

The central banker admitted, however, that none of these efforts can guarantee that another big market participant won't be taken down. He even called on Congress to consider new ways to assist the orderly unwinding of a big securities company (the way the FDIC handles the liquidation of a bank, for example), urging it to work with the Treasury Department on ideas.

http://www.forbes.com/home/2008/07/08/bernanke-fed-banks-biz-wall-cx_lm_0708mortgage.html