WASHINGTON (Reuters) - A top U.S. bank regulator struck out against the portions of the financial industry that are fighting reforms, saying they are using fear tactics.
Sheila Bair, chairman of the Federal Deposit Insurance Corp, said on Monday that some in the financial services sector are trying to argue that regulatory reform would stifle innovation and impede economic growth.
“That makes me angry,” Bair said in a text of remarks prepared for a lecture at Kansas State University.
Bair said the extreme market interventions that have occurred during the recent financial crisis have been difficult for her as a life-long Republican and market advocate.
But she said they were necessary and that government needs even more tools to discourage financial firms from getting so large that taxpayers are forced to provide assistance if the firms become unstable.
“The government has been going into places where we don’t want to be,” Bair said, but she added: “We simply cannot afford to maintain the status quo.”
Lawmakers are hammering out a major piece of legislation that would tackle fears that a few elite financial giants are “too big to fail.”
The legislation would grant vast powers to a new systemic risk regulatory council, the Federal Reserve and the FDIC to monitor and address risks to economic stability posed by shaky financial holding companies.
It would also create a new consumer agency to police financial products -- a change that is desperately needed to protect the public, Bair said.
“Given the importance of the consumer to our overall economy, it is amazing to me that we haven’t done a better job in protecting them,” she said.
Reporting by Karey Wutkowski; Editing by Tim Dobbyn