Bernanke Takes On Warren and Vitter, Avoids Key Issue

Flexibility is one key to dealing with a financial crisis, as no one, including regulators or even the big banks, can predict the exact scope and impact points of the next systemic failure, although separate probability analysis indicates derivatives are likely to be involved. A proposed Senate bill would eliminate a key U.S. Federal Reserve’s option in dealing with the next financial crisis, former Fed Chief Ben Bernanke wrote in his recent Brookings Institute blog post. In particular, the bill takes the "easy button" solution to provide unrestricted cash to banks during crisis off the table, as opposed to separating toxic bank divisions from successful businesses. Eliminating the option to provide banks unrestricted cash is not...