Senator Corker to Introduce Resolution Authority Bill
Senate Banking Committee member Bob Corker said he plans to introduce legislation giving regulators authority to wind down large financial companies whose failure poses a risk to the economy.
“I think we could come to a pretty quick agreement on how to deal with the resolution piece in a bipartisan way,” he said in an interview yesterday, after the Federal Reserve, Federal Deposit Insurance Corp. and other regulators testified before the committee.
Corker said there is “not much sympathy” for the Treasury’s proposal that taxpayers fund a resolution of a large institution first and assess fees to the industry later. “That’s not a path many on the committee want to go down,” he said.
Senator Mark Warner, a Democrat from Virginia, will co- sponsor the legislation, said Riki Parikh, a spokesman for Warner.
Fed Governor Daniel Tarullo yesterday told the banking committee that giving the Fed authority to regulate systemic risk “would be an incremental and natural extension” of the central bank’s current role.
In the interview, Corker, a Republican from Tennessee, said the “bloom is off” that idea.
“We need to have an entity to deal with systemic risk,” the senator said fast payday loan no faxing. “But the action Tarullo talked about was rule-making. A council can do that.”
Bair, Schapiro
FDIC Chairman Sheila Bair and Securities and Exchange Commission Chairman Mary Schapiro, who also testified before the committee yesterday, urged Congress to create a regulatory council to monitor firms for risks, breaking with an Obama administration plan giving the power to the Fed.
Corker said he had concerns about the Fed’s independence in creating monetary policy should it take on the role as systemic risk regulator. “I worry about what that does to the integrity of the Fed,” he said.
He expressed support for the plan put forth by Bair, which calls for an industry-supported fund that would eliminate the need for taxpayer money in winding down non-bank financial companies.
“Generally speaking, I think there’s a lot of support for the viewpoint that Sheila Bair has been putting forth, on both sides of the aisle. There’s a lot of recognition of the prudence of that,” he said.