Bernanke Urges Strong Risk-Management Rules for Clearinghouses

Federal Reserve Chairman Ben S. Bernanke said the U.S. should subject clearinghouses for financial trading to “strong” risk-management oversight to minimize the chance they’ll require emergency government aid.

The existence of a backstop “could give rise to moral hazard” and lead to “insufficient attention” to private-sector aid solutions, Bernanke said in a speech today in Stone Mountain, Georgia. “The Federal Reserve believes it essential that the regulatory regime for these institutions include strong prudential requirements for credit and liquidity risk management,” default procedures, cash buffers and collateral, he said.