Bernanke footnote: Fed wants end to ‘minimum reserve requirements’

[jonathon]

http://rawstory.com/2010/03/footnote-fed-believes-minimum-reserve-requirements-eliminated/

Financial wonks? What do you think of this?

In the footnotes of a speech U.S. Federal Reserve Bank Chairman Ben Bernanke would have given to the House Financial Services Committee on Feb. 10, lies a unique and startling disclosure.

Hosted on the Federal Reserve's own servers, the written testimony of the bank's chairman explains in plain text what expanding the Fed's powers will do.

"The Federal Reserve believes it is possible that, ultimately, its operating framework will allow the elimination of minimum reserve requirements, which impose costs and distortions on the banking system," footnote number nine, at the bottom of the page, explains without additional qualification.

Sen. Chris Dodd (D-CT), who is not running for reelection, is currently pushing a financial reform bill that would grant the Fed unprecedented new powers to regulate financial markets, including insurance companies and small lenders, under the auspice of forcing such firms to lessen their exposure to risky investments.

Full story at top link...

[DJ13]

1. That would transfer all financial responsibility to the government

If we thought the past bailouts were bad...........

[stray cat]

2. The minimum needs to be increased! They have to be able to cover their debts otherwise tax payers

have to.

[Kurt_and_Hunter]

3. (?) Perhaps having any set % is too "game-able"

I doubt Bernanke is proposing eliminating the concept of bank solvency, but rather achieving the aim by a different route.

(There was a story a while back about Bernanke proposing the elimination of social security which was wholly bogus, but these guys don't talk like politicians so it is easy to go through their testimony and find seemingly alarming elements.)

Recent events have taught us a lot about the ways such regulations can/will be evaded... it is not necessarily sinister if it were decided that a set % or reserves (whatever the %) is not the best way to do something.

Depends on the alternative method.

[Bobcat]

4. No Reserve Req.?

This would make ir impossible to control the money supply. This thinking started 5+ years age when the FED stopped disclosing the M3 totals. Zimbabzwe - here we come!!!

[Trillo]

5. Gotta love that word "unhinge"

here's another good one: "free-floating, infinitely self-replicating capital".

Who needs the limited fusion of the sun when you have "infinitely self-replicating capital?"

[dixiegrrrrl]

6. You might find some of these comments interesting

from an earlier post of this story:
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=114x76961