Pianalto: Acting Hastily Can Create New Problems

Acting hastily to install reforms after a crisis not only often fail to solve the problem, but can also create new problems, Federal Reserve Bank of Cleveland president and chief executive officer Sandra Pianalto said yesterday.

“If reforms are to be successful and enduring, they should reflect comprehensive assessments and analyses of the factors that contributed to the crises,” Pianalto told the Hyman P. Minsky Conference on the State of the U. S. and World Economies, according to prepared text of the speech released by the Fed.

According to the Cleveland Fed president, a process of consolidated supervision should be used “to ensure that the aggregate risks of the entire firm are identified in a timely way and that appropriate supervisory action can be taken, regardless of where that risk originates in the organization.”

 “Without consolidated supervisory authority, oversight gaps will continue,” Pinalto said, “making it difficult to identify cross-entity risks within a bank holding company and to take appropriate action to mitigate those risks.”

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