The hot topic on this hot day in Washington is the mortgage mess.
On the heels of the Senate advancing legislation aimed at helping imperiled borrowers avoid foreclosure, Federal reserve Chairman Ben Bernanke gave his views on how Congress can overhaul banking regulations.
“Congress may wish to consider whether new tools are needed for ensuring an orderly liquidation of a systemically important securities firm that is on the verge of bankruptcy, together with a more formal process for deciding when to use those tools,” Bernanke said in a speech in Arlington to the Federal Deposit Insurance Corp.’s forum on mortgage lending for low-income households, according to the Washington Post.
Bernanke also recommended that Congress make some of the voluntary federal regulation of banks mandatory. Currently, large Wall Street investment firms agree voluntarily to oversight by the Securities and Exchange Commission.
“Legislation may be needed to provide a more robust framework for the prudential supervision of investment banks and other large securities dealers,” Bernanke said.
Meanwhile, the advance of the Senate’s housing rescue bill doesn’t ensure smooth sailing for the measure. The White House has still not backed down from its veto promise, and several key Republicans are still pressing against the measure.