Ex-Fed chief calls for regulatory shakeup

Paul Volcker, former head of the Federal Reserve, has issued a radical call for the streamlining of US financial regulators, urging policy makers to follow the UK's decision to consolidate its watchdogs after the financial crisis.

Mr Volcker said the US's failure to end its mishmash of regulatory agencies in its immediate response to the crisis had created gaps in supervision where shadow banking and other phenomena posed troubling threats to financial stability.

"All the evidence is that the time has come to do something," he told a press conference in Washington on Monday, arguing that regulators continued to lag far behind the growing size and complexity of financial markets.

He called for the abolition of one of the three main US bank regulators, the Office of the Comptroller of the Currency, and for the merger of two markets regulators - the Securities and Exchange Commission and the Commodity Futures Trading Commission.

A report from a group he founded, the Volcker Alliance, said that "failure to reorganise the regulatory structure will contribute to the build-up of systemic risk and make us more vulnerable to the next financial crisis".

Such moves would put even more regulatory power in the hands of the Federal Reserve, the US central bank.

In the UK, policy makers responded to the financial crisis by putting more regulatory power in the hands of the Bank of England.

Mr Volcker addressed his call to Congress, where Republicans and Democrats are still fighting over the Dodd-Frank post-crisis reforms passed in 2010, but acknowledged that similar calls had gone unheeded several times over the past 50 years.

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