Bernanke indicated that financial stability “could be...enhanced by a more explicitly macroprudential approach to financial regulation and supervision in the United States.” A macro-prudential regulatory approach, Bernanke explained, would focus on “signs of [asset] bubbles, growing risks like the subprime mortgage market, or risks shared by interconnected markets.”
Bernanke suggested that Congress could empower a government agency such as the Fed to monitor the breadth of markets and financial institutions in order to “inhibit the buildup of risks within the financial system and improve the resilience of the financial system to adverse shocks.”
“This view of systemic risk mirrors the testimony NAMIC submitted to the House Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises during a hearing on systemic risk held Thursday, March 5,” said Charles Chamness, NAMIC’s president & CEO.
In that testimony, NAMIC stated that any potential systemic risk regulator should concentrate on market-oriented events rather than particular institutions designated by regulators as “systemically significant.”
“NAMIC appreciates the Fed chairman’s comments and agrees with the need for a broad overview of those potential risks that are market-oriented,” Chamness said. “Rather than focusing on the specific business or legal characterizations of any institutions as the basis for assessing systemic risk, NAMIC encourages Congress to adopt legislation to oversee and regulate systemic risk that focuses on the impact of products or transactions used by financial services firms.”