Chairman Ben Bernanke on Thursday urged regulators to move ahead with new proposals aimed at preventing a financial crisis, even as the current financial crisis continued to weigh on the markets.
Bernanke, in a speech in Richmond, Va., endorsed new regulations
by the Bush Administration designed to rein in mortgage lenders, banks, investors and credit ratings agencies.
"We do not have the luxury of waiting for markets to stabilize before we think about the future," Bernanke said. "Many of the necessary changes that have been identified, including increasing transparency, improving risk management and attaining better coordination among regulators could provide important support to the process of normalizing our financial markets."
Among other measures, Bernanke recommended that mortgage brokers have a set of nationwide licensing standards.
For credit ratings agencies like Moody's Investors Service and Standard & Poor's, Bernanke proposed new disclosure requirements about potential conflicts of interest, and he wants the firms to differentiate between ratings on complex structured products and conventional bonds.
He also said issuers of mortgage-backed securities should be required to disclose if they have shopped around the products to different ratings agencies in search of a more favorable rating.
The proposals, developed by the President's Working Group on Financial Markets, mirror some that have been put forth by Democrats in Congress during the past year, as the nation struggles to overcome the steepest declines in residential real estate since the Great Depression.
Billions of dollars in writedowns on mortgage-related investments by major banks like
( MER), as well as government-sponsored mortgage giants like
( FNM) and
( FRE), have spurred calls for stricter government oversight.
is raging in Washington, D.C. about how to remedy the current financial crisis.
"These recommendations should moderate the likelihood and severity of future financial shocks and enable market participants to better withstand shocks when they occur," said Bernanke.