Bernanke: I Support Your Efforts to Give Me More Power

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We mentioned the news in Ben Bernanke's speech this morning: the Fed's emergency lending is likely to go on past its September expiration.
Two additional morsels were included in the speech. Bernanke suggested that Congress give the Fed authority over payment and settlement to deal with counterparty risk and other problems. His "a strong case could be made" preface strikes us as the regulatory version of "I'm not saying, but I'm saying."
Bernanke also endorsed the creation of a special resolution regime to help financial firms fail quickly and efficiently unwind their positions, although he caveated that with a demand for "a prudent manner" in doing so, implicitly later so as not to spook markets.
The mandate and tools for the special resolution regime are part of Paulson's plan, and while Bernanke didn't say who should command these new powers, we think he could be pointing out to the apparently Anglophile Hank that the Bank of England is taking control of Britain's liquidation oversight.

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