Federal Reserve Chairman Ben Bernanke and Treasury Secretary Tim Geithner are expected to testify before the House Committee on Oversight and Government Reform on the situation in Europe. According to prepared remarks released by the Fed on Monday evening, Bernanke is expected to tell Capitol Hill that banks have limited exposure to the peripheral European nations that are in trouble, but still have material exposure to European banks in the "core" nations. He is also expected to highlight the exposure of money market funds to Europe as a key risk. The Fed recently conducted stress tests to capture the vulnerability of the financial system to stresses that might arise from the European crisis. 15 out of 19 banks met the Fed's capital adequacy requirements under the stressed scenario. "The recent reduction in financial stresses in Europe is a welcome development for the United States, given the important trade and financial linkages connecting our economies," Bernanke is expected to say in concluding remarks. "However, Europe's financial and economic situation remains difficult, and it is critical that the European leaders follow through on their policy commitments to ensure a lasting stabilization."
Senators from both parties are working towards giving regulators more time to write the highly complex and controversial Volcker rule, which has been a source of much anxiety for universal and investment banks.