WASHINGTON (MNI) – The following is the third and final part of the
complete text of the semi-annual monetary policy by Federal Reserve
Chairman Ben Bernanke before the Senate Banking Committee Wednesday:

Financial Reform Legislation

Last week, the Congress passed landmark legislation to reform the
financial system and financial regulation, and the President signed the
bill into law this morning. That legislation represents significant
progress toward reducing the likelihood of future financial crises and
strengthening the capacity of financial regulators to respond to risks
that may emerge. Importantly, the legislation encourages an approach to
supervision designed to foster the stability of the financial system as
a whole as well as the safety and soundness of individual institutions.
Within the Federal Reserve, we have already taken steps to strengthen
our analysis and supervision of the financial system and systemically
important financial firms in ways consistent with the new legislation.
In particular, making full use of the Federal Reserve’s broad expertise
in economics, financial markets, payment systems, and bank supervision,
we have significantly changed our supervisory framework to improve our
consolidated supervision of large, complex bank holding companies, and
we are enhancing the tools we use to monitor the financial sector and to
identify potential systemic risks. In addition, the briefings prepared
for meetings of the FOMC are now providing increased coverage and
analysis of potential risks to the financial system, thus supporting the
Federal Reserve’s ability to make effective monetary policy and to
enhance financial stability.

Much work remains to be done, both to implement through regulation
the extensive provisions of the new legislation and to develop the
macroprudential approach called for by the Congress. However, I believe
that the legislation, together with stronger regulatory standards for
bank capital and liquidity now being developed, will place our financial
system on a sounder foundation and minimize the risk of a repetition of
the devastating events of the past three years.

Thank you. I would be pleased to respond to your questions.

– end – 3 of 3 –

** Market News International Washington Bureau: 202-371-2121 **

[TOPICS: M$U$$$,MMUFE$,MGU$$$,MFU$$$,MT$$$$,M$$CR$]