Bernanke warns against 'ad hoc' rules

The Federal Reserve chief today warned against creating "ad hoc" securities regulations—especially for derivatives or hedge funds.
MAY 15, 2007
By  Bloomberg
Federal Reserve Chairman Ben S. Bernanke today warned financial regulators against devising "ad hoc" rules for financial instruments or institutions—especially derivatives or hedge funds. "We should strive to develop common, principles-based policy responses that can be applied consistently across the financial sector to meet clearly defined objectives," Mr. Bernanke said in prepared remarks, delivered via satellite to the Federal Reserve Bank of Atlanta's 2007 Financial Markets Conference in Sea Island, Ga. Regarding credit derivatives, Mr. Bernanke suggested that regulators need to be wary of drawing artificial distinctions, since not all are complex or linked to credit risk. He added that hedge funds and their trading strategies should be "unambiguously distinguished" from those of large global banks or of some traditional asset managers. "In addressing the challenges and the risks that financial innovation may create, we should also always keep in view the enormous economic benefits that flow from a healthy and innovative financial sector," he added. However, he suggested that financial stability depends on the ability of large institutions to properly manage and measure risk and protect market infrastructure and liquidity. "Financial innovation has great benefits for our economy," Mr. Bernanke said. "The goal of regulation should be to preserve those benefits while achieving important public policy objectives, including financial stability, investor protection, and market integrity."

Latest News

Trio of advisors switch for 'Happier' times at LPL Financial
Trio of advisors switch for 'Happier' times at LPL Financial

Former Northwestern Mutual advisors join firm for independence.

Indie $8B RIA adds further leadership talent amid growth drive
Indie $8B RIA adds further leadership talent amid growth drive

Executives from LPL Financial, Cresset Partners hired for key roles.

Stock volatility remained low despite risk events
Stock volatility remained low despite risk events

Geopolitical tension has been managed well by the markets.

Fed minutes to provide signals on rate cuts
Fed minutes to provide signals on rate cuts

December cut is still a possiblity.

Trump's tariff talk roils markets, political leaders
Trump's tariff talk roils markets, political leaders

Canada, China among nations to react to president-elect's comments.

SPONSORED The future of prospecting: Say goodbye to cold calls and hello to smart connections

Streamline your outreach with Aidentified's AI-driven solutions

SPONSORED A bumpy start to autumn but more positives ahead

This season’s market volatility: Positioning for rate relief, income growth and the AI rebound