When the head of the Fed calls for greater financial regulation, echoing Treasury Secretary Henry Paulson, a former Wall Street titan, it's significant. It's also a repudiation of the long-held view that markets alone can best regulate themselves. Whether regulations will be successful is an open question.Italics mine. That's quite a statement, isn't it? Some of their investments are so dodgy that banks would rather pull out entirely than admit they're even involved with them. I'd sure like to know which investments those are.
"I think it is going to be a turn back towards more regulation, but it's not going to be so easy," said Barry Bosworth, a presidential adviser in the 1970s who's now a senior economics fellow at the Brookings Institution, a center-left research center. "I think they've got a dilemma that some of these new financial instruments, and markets, have become so complex. If they continue to let them operate, it's not clear that the regulators will be able to keep up."
...."I think they are going to be forced openly to think about banning some of these instruments," economist Bosworth said. He said that forcing banks to disclose some of their investments may simply lead them to pull out of certain markets.