WASHINGTON, DC - In an effort to address concerns about the state of the U.S. economy, U.S. Senator Jack Reed (D-RI), a senior member of the Banking Committee, today questioned U.S. Treasury Secretary Henry Paulson, Federal Reserve Board of Governors Chairman Ben Bernanke, and Securities and Exchange Commission (SEC) Chairman Christopher Cox.

This hearing marked the first time that the heads of the Treasury, Federal Reserve, and SEC were together before the Senate Banking Committee to discuss the state of the economy since a similar hearing was held shortly after the terrorist attacks of September 11, 2001.

"We are at a critical moment. The economy is slowing as financial markets struggle to reprice risk and restore liquidity, all the while housing prices are declining at an unprecedented rate. Congress and the Federal Reserve have started to provide fiscal and monetary stimuli. However, it is increasingly clear that this multifaceted problem is going to require concerted efforts to prevent further deterioration in our financial markets and stave off a recession. If we don't intervene early and quickly enough, conditions could get much worse. At the same time, if the markets bounce back and we fail to correct the regulatory gaps and systemic weaknesses that caused this situation in the first place, then any perceived recovery would be an illusion," said Reed.

Senator Reed, Chairman of the Subcommittee on Securities, Insurance, and Investments, focused on how regulatory lapses may have contributed to the current credit crisis and highlighted four areas of concern: enhancing transparency and improving disclosure for structured finance; ensuring that accounting rules are reflecting the economics of financial transactions to investors and are rigorously enforced; strengthening oversight of credit rating agencies; and updating regulatory structures.

"A regulatory structure that limits risk in one area but is unable to contain it in others ultimately leaves all investors exposed to volatility in any part of the financial system. Fundamentally, this is about protecting the savings of average Americans whether for retirement, college, or home, and providing access to capital for businesses and governments to make investments in our future, so that our economy can continue to be the most healthy and vibrant in the world," concluded Reed.