For starters, the Bernanke signed a Memorandum of Understanding (MOU) with the Securities and Exchange Commission Chairman, Christopher Cox, designed to enhance cooperation through sharing information. The information to be shared covers a number of important areas of common interest, including anti-money laundering, bank brokerage activities under the Gramm-Leach-Bliley Act, clearance and settlement in the banking and securities industries, and the regulation of transfer agents.
The MOU builds on the ever growing relationship between the two entities, adding to the existing arrangements and recent cooperation on matters such as those including bank and investment capital and liquidity following the Federal Reserve’s emergency opening of credit facilities to primary dealers.
The MOU will improve the ability of the SEC to perform its role as primary supervisor of Consolidated Supervised Entities and Primary Dealers, and improve the ability of the Federal Reserve to perform its role in overseeing the stability of the financial system. The importance of this deepened cooperation is highlighted by the recent stress in the financial markets affecting commercial and investment banks, as well as many other market participants. (Source: Federal Reserve)
Overall, the move should be a good one if used properly. However, the more government tends to stick their nose into things, the greater they get screwed up. Time will tell how this all plays out, but this press release may not be coincidentally timed with Bernanke’s speech today which I will cover in a post after this one.
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