Federal Reserve Chairman Ben Bernanke is speaking this morning to bankers at the Federal Reserve Bank of Chicago. His speech is called “Monitoring the Financial System,” but it really involves the fallout from after the financial crisis and regulatory control over liquidity at the banks labeled “too big to fail.”

Bernanke starts out saying we are more than four years beyond the most intense phase of the financial crisis but notes that the legacy of that crisis remains. The jobs lost have not been fully recovered and the financial system continues to struggle with the consequences of what happened in 2007 to 2009.

Regulatory pressures from Dodd-Frank, reform on Wall Street and the Consumer Protection Act have come at a time when the Basel III standards are hitting internationally. Bernanke said that the Federal Reserve has already made significant changes to how it conceptualizes and carries out regulation and supervision.

Bernanke’s full speech is here. We would advise that you take a read of our views on why it is so easy to talk up regulation and liquidity rules at the big “too big to fail” banks but why it is nearly impossible to create actionable efforts that can really force change. The reality is that you could end up in a regulatory-enduced recession.

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