Officials testified on implementing provisions of the 2010 financial regulatory law, the Dodd-Frank Act. The act regulates so-called “too big to fail” financial institutions and companies that pose a systemic risk to the entire economy.
Federal Reserve Chairman Ben Bernanke said if Congress did not agree to raise the debt limit “the financial system would again destabilize, which would have extremely dire consequences for the economy.” FDIC Chair Sheila Bair said efforts to repeal the law would be “very harmful” and would be an “open invitation to bailouts.”
During the hearing, the committee also voted 12-10 along party lines to approve the nomination of Peter Diamond to be a Federal Reserve Governor. This was third time the committee has approved Mr. Diamond’s nomination.