Federal Reserve Chairman Ben Bernanke said risks persist in wholesale funding markets used frequently by Wall Street brokers to finance securities trading, Bloomberg reported.
"Important risks remain in the short-term wholesale funding markets," Bernanke said today in a speech at a Federal Reserve Bank of Chicago banking conference. "One of the key risks is how the system would respond to the failure of a broker-dealer or other major borrower."
He talked about how the Fed has overhauled risk monitoring since a collapse in mortgage finance triggered the crisis in 2008. The Fed is stress-testing the largest banks and has set up teams and developed models to look for risks across both financial markets and institutions, switching to a more industrywide approach.
Asked about the issue of too-big-to-fail banks, Bernanke said regulators should tell banks to hold more equity if they decide that current rules do not do enough, rather than impose an arbitrary limit on size, Reuters reported.
In other economy-related news today, the U.S. government posted its biggest monthly budget surplus in five years, The Wall Street Journal reported. The surplus was $112.89 billion in April, compared with $59.12 billion a year earlier. The federal government has historically run a budget surplus in April, when many Americans file their tax returns.