'Amnesia' threat to reform

Sheila Bair, the outgoing chairman of the Federal Deposit Insurance Corporation, one of the most powerful US financial regulators, warned yesterday that "amnesia" over the 2007-2009 credit crisis is threatening important Wall St reforms.

Her remarks come as the banking industry lobbies to delay, de-fund or delete significant portions of the reform legislation passed last year, and to derail international agreements that might result in the largest banks having to hold extra capital to reflect the risks they pose to the financial system.

Speaking at the Council on Foreign Relations in Manhattan, Bair suggested the banking lobby appeared to be getting the upper hand in political debate.

"I see a lot of amnesia setting in now," she said. "Instead of being asked, 'Why aren't we doing more to reform the securitisation process?' for example, we are getting instead, 'Aren't you going to make it harder for people to get loans?"'

The FDIC is responsible for regulating deposit-taking banks, and will also oversee a new "resolution authority" to wind down systemically important firms that threaten the financial system or come close to collapse.

Other regulators, including the Federal Reserve and the Commodities Futures Trading Commission, are fleshing out details of hundreds of new rules demanded under the Dodd-Frank Wall St reform Act.

- Independent