Fed chief calls on banks to boost capital, risk oversight
Agence France-Presse
First Posted 22:47:00 05/15/2008
WASHINGTON -- Federal Reserve chairman Ben Bernanke called on US banks Thursday to increase capital cushions and improve risk management amid "ongoing fragility" in the markets.
"I strongly urge financial institutions to remain proactive in their capital-raising efforts," Bernanke said in a speech in Chicago.
"Recent events have also demonstrated the importance of generous capital cushions for protecting against adverse conditions in financial and credit markets," he said, referring to the global credit squeeze that flared in August, leading to billions of dollars in losses on soured US mortgage-related investments.
The Fed chief urged firms to "redouble their efforts" to improve risk-management practices, "particularly in light of the ongoing fragility of market conditions."
Bernanke said that the regulatory framework needs strengthening.
"We are also considering the need for additional or revised supervisory guidance regarding various aspects of risk management," he said.
In cooperation with authorities in other countries, he said, the US central bank is "seeking to promote better disclosures by banking institutions with the goal of increasing transparency, thereby strengthening market discipline."
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