JACKSON HOLE, Wyoming (Reuters) – Global financial regulators are likely to impede growth rather than foster it unless they are better policed, an economist warned policymakers on Saturday.
While regulatory reform since the 2007-09 financial crisis has given added clout to government regulators, the concentration of power is likely to do more harm than good unless the regulators themselves are subject to proper oversight, Brown University economist Ross Levine said in a paper presented at the Kansas City Federal Reserve Bank's annual meeting here.
"As more responsibilities are heaped on official regulatory agencies, it is unclear whether they have either the capabilities or the incentives to properly shape the incentives of financial systems," he said in the paper.
A case in point is the Fed itself, which won new authority over large financial institutions in the Wall Street reform legislation passed last year.
Central bank regulators do not lack in integrity, he said, but nevertheless relying on the "moral compass" of regulators does not guarantee they will do the right thing.
"People flow between the Fed and the financial services industry, raising concerns that this 'revolving door' threatens the Fed's independence and its ability to represent the broad interests of the public," Levine said in the paper "And, the daily interactions between regulator and regulated can influence the perspectives of regulators, such that regulators take a narrow, skewed view of regulatory policies."
The Fed has drawn sharp criticism from politicians at home and abroad who say the central bank's super-easy monetary policy is driving down the dollar and pushing up the price of global commodities.
Levine's critique of the Fed is different because it is focused on the bank's regulatory role. It is notable because it paints the world's most influential central bank and other U.S. regulators with the same brush as government financial watchdogs in countries around the world.
Oversight of regulators is critically important for promoting economic prosperity, Levine said, because without effective regulators, the financial system will not operate correctly and will drag on growth.
"This lesson is as applicable today for the United States as it is for countries with less well-developed institutions," he wrote.
(Reporting by Ann Saphir; Editing by Dan Grebler)
Nearly 200,000 homes in North Carolina are without power as Hurricane Irene slams into the state.
Winds of up to 80 miles per hour whipped ashore Saturday morning, ripping power lines from poles and snapping trees in half.
Hardest hit were Wilmington and Wrightsville Beach, N.C., where Progress Energy reports 190,000 customers without power. Most of those customers are residences.
"We expect those numbers to increase," Progress spokeswoman Julia Milstead said.
Duke Energy also reports about 2,300 customers without power, mostly in Durham, N.C. SCE&G, which serves most of South Carolina, says it restored power to 2,500 customers last night.
Power companies have called in several hundred workers from surrounding states to tend to the disaster. Crews are rushing out between bands in the hurricane, when the wind and rain eases. They're looking for the worst damage first at towering transmission lines where an outage could put an entire county in the dark.
Much more damage is expected as Irene travels up the Eastern Seaboard.
An unusually large number of people may be affected by Irene. That's because it is forecast to stay just offshore_and thus retain much of its power_as it inches up the coast from North Carolina to New England. When a hurricane hits land, it quickly loses steam.
The entire Eastern Seaboard lies in the storm's projected path, with flooding and damage from winds likely. North Carolina, Virginia, Maryland, New Jersey, New York, Connecticut and Rhode Island have declared emergencies. New York City issued evacuation orders for people in low-lying areas.
PARIS – The return of his passport had great symbolic importance for Dominique Strauss-Kahn, his biographer said Friday, and the former IMF chief would likely use it soon to return home to France but was unlikely to immediately throw himself back into politics there.
Strauss-Kahn was once considered the front-runner to be France's next president, until he was accused of attempting to rape a maid at a pricey New York hotel in May. In the wake of that accusation, he was forced to relinquish his prestigious post at the International Monetary Fund, spent nearly a week behind bars, paid potentially hundreds of thousands on house arrest and missed a deadline to declare his presidential candidacy.
This week, his fortunes changed: Prosecutors dropped the charges against him, saying they weren't sure they could build a case after calling into question his accuser's credibility.
Though evidence showed Strauss-Kahn had a sexual encounter with Nafissatou Diallo, prosecutors said the accuser was not credible because of lies she has told, including an earlier false rape claim.
In an interview with The Associated Press on Friday, Michel Taubmann, who visited Strauss-Kahn a day earlier, said he was not a broken man.
"This is a man who has suffered. It is a man who will obviously take some time to get his bearings," said Taubmann, who is the author of "The True Story of Dominique Strauss-Kahn." "So this is a man very disappointed but not a broken man."
Taubmann said the return of his passport — which Strauss-Kahn got back Thursday — was very significant since he was used to being engaged with the world at the IMF. Strauss-Kahn had been staying in a town house in New York while prosecutors tried to build a case against him, but it is thought he will now return to Washington, where the IMF is based and he and his wife have a home.
The next step is likely to be a return to France, Taubmann said.
But he added, "I don't see Dominique Strauss-Kahn picking up his life where he left off and returning to France to throw himself in the political battle."
Strauss-Kahn still faces a civil suit from Diallo, and a French author, Tristane Banon, has filed a criminal complaint in France, accusing him of trying to rape her in 2002. The Paris prosecutor's office is still investigating that accusation.