Plan would monitor Wall St. risk

U.S. Sen. Jack Reed has proposed creating a National Institute of Finance to track Wall Street innovations and monitor systemic risk as U.S. officials seek ways to stay ahead of potential threats to the nation’s economy.
The new agency would monitor companies’ transactions and positions, and gauge risks within individual firms and markets according to a statement released last week by Reed, a Rhode Island Democrat who leads a Senate Banking Committee panel that oversees financial markets.
“We need to bring accountability and transparency back to Wall Street,” Reed said. “Creating a National Institute of Finance will help strengthen the economy and prevent future systemic failures.”
Congress is working on a bill to guard against systemic risk after largely unregulated bets tied to the U.S. subprime mortgage market led to the failures of Lehman Brothers Holdings Inc. and Bear Stearns Cos. and $182.3 billion in government bailouts for American International Group Inc. Reed was part of a bipartisan team of senators crafting a regulatory overhaul measure before negotiations collapsed recently.
President Barack Obama’s regulatory overhaul plan released in June called on lawmakers to create a council of regulators to monitor systemic risk, as well as a method for unwinding systemically important financial firms and a Consumer Financial Protection Agency to police banks for abuses in credit card and mortgage lending. &#8226