Former Federal Reserve Board Chairman Ben Bernanke, who helped steer a flailing economy through the Great Recession into recovery, is worried about congressional proposals to unwind Dodd-Frank regulations. Without naming the Financial Choice Act, which is making its way through Congress, Bernanke told NPR’s Morning Edition radio show that he’s “very concerned about the future” if the regulatory reforms put in place to prevent another financial crisis are taken away.
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The reforms include higher capital levels for banks, tougher oversight of financial institutions and tools needed to unwind a failing financial giant so that it didn’t bring down the whole economy.
“We did a lot of work following the crisis to improve our oversight of the financial system following the crisis to improve our oversight of the financial system to make sure the banks have more capital, and I’m a bit concerned that some of the proposals in Congress today would roll back a lot of those important regulations,” said Bernanke.
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Another development that worries Bernanke: potential budget cuts to agencies like the Bureau of Labor Statistics, which calculates the unemployment rate as well as other financial data. The bureau is part of the Labor Department, whose budget is cut 21% in President Donald Trump’s proposed budget outline, aka his “skinny budget,” but there are no details yet on those cuts.
“It’s really important that we have good numbers so we understand what’s actually going on in the economy,” said Bernanke. “Otherwise our policies are not going to be very effective.”
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When asked for his opinion about the tax cuts that Trump has proposed, which Treasury Secretary Steven Mnuchin asserts will pay for themselves, Bernanke noted that not much is known about the cuts because no details were given. But he added, “The proposal suggests there would be a big increase in the deficit.”