Bernanke wants to be your banker

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Fed Chairman Ben Bernanke wants to keep such a close eye on the banking system that customers may start to run into him behind the teller windows.

It what as been a characteristic approach to suggesting new regulation, an approached shared by the Fed, Treasury, and FDIC, Bernanke is arguing for heightened supervision of individual banks and the transactions that go on between banks throughout the system. It is the kind of vigilance meant to catch weaknesses before they turn into avalanches like the subprime mortgage derivatives collapse.

According to CNBC, "A principal lesson of the crisis is that an approach to supervision that focuses narrowly on
individual institutions can miss broader problems that are building up in the system," the Fed chief said.

Bernanke's suggestions are typical of what regulators urge during a crisis, monitoring even minute details of private sector activity on the premise that this will prevent future cataclysms. It carries the risk of beating risk-taking out of the system entirely, which can have its own negative consequences.

Consumers and businesses are having enough trouble getting credit now because of risk-averse bankers. With the government looking over the shoulders of the banks, loaning someone with a middling credit score money to buy a house, which will help the real estate market, will get even harder.

Douglas A. McIntyre is an editor at 24/7 Wall St.

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