If that regulator is the Fed and is also responsible for systemic regulation and monetary policy, we risk damaging one of the most important and independent institutions in our financial system.
As I spoke with chief executives when we left the auditorium, most said they agreed with the need for a systemic regulator.
The president also called, again, for "a systemic regulator" — someone who could monitor all financial institutions and be able to take action before one firm's problems could infect the rest of the system.
The release of IL-6 from subcutaneous depots into the systemic circulation and the fact that this release is greater on obese subjects support, a possible novel role for IL-6 as a systemic regulator of body weight and a regulator of lipid metabolism.
Because Congress has no oversight of the central bank, he says, "This structure is not appropriate for a federal banking regulator, let alone a systemic regulator".
Making the Fed systemic regulator also runs the danger of compromising its political independence, which is crucial for executing the best possible monetary policy, its main function.
The central bank stands the best chance of succeeding as the systemic regulator.
But the systemic regulator will surely come under pressure to rule on specific individuals' salaries for political reasons (ie, because the public thinks a bonus is outrageously big, not because it is endangering the system).
Even so, the worry is that a systemic regulator would be biased towards intervention, because it would face less criticism for puncturing a non-bubble than for failing to spot a real one.Alex Pollock of the American Enterprise Institute (AEI), a think-tank, is concerned that the creation of an official systemic regulator would bring false comfort, just as the Fed's founding in 1913 did.
The first step, before rushing to identify a systemic regulator, is to define and quantify the systemic risk.
