Hub’s Fed chief calls for changes to guard economy

Rosengren, opening the Boston Fed’s annual conference here, called for new powers for regulators and simpler structures for financial institutions as the Federal Reserve released a report that showed the nation and New England still feeling the effects of the last year’s financial crisis. The report, known as the Beige Book, found that economic conditions have improved, but business activity is rebounding slowly from depressed conditions.

In New England, the Fed said, businesses are reporting mixed results and a slow recovery is expected next year. Some manufacturers, for example, reported improving sales, while commercial real estate firms are still experiencing declines.

Meanwhile, “Wage increases are very modest or zero’’ in the region, the Fed reported. “Large layoffs appear to have ended, but hiring remains very limited.’’

The Beige Book, which is released eight times a year, collects anecdotal information from businesses in each of the Fed’s 12 districts to help assess economic conditions in advance of the central banks’ interest rate-setting meetings. Policy makers are expected to hold the Fed’s benchmark rate near zero when they next meet Nov. 3-4.

The Boston Fed conference gathers academic and business economists, as well as policy makers, to explore current issues each year. This year, it is examining changes in regulatory and economic policies that could stop the financial wildfire that a year ago pushed US and global economies to the brink of a second Great Depression.

Rosengren compared the financial crisis to the Boston’s Great Fire of 1872, which destroyed more than 700 buildings and left a wide swath of the city burnt and barren.

Just as Boston and other major cities professionalized fire departments, modernized equipment, and upgraded building codes to prevent and contain fires before they become major conflagrations, policy makers must revamp financial regulations to prevent problems at individual institutions from spiraling into a systemwide crisis.

For example, Rosengren said, at least one regulatory agency should be mandated to monitor large financial institutions to detect and eliminate threats that could pull down the entire system. He also suggested simplifying the structures of financial firms so if they do get in trouble, their parts can be sold easily to avoid government takeovers.

“This is a time we need to reconsider some of what we’ve done,’’ he said, “and really learn the lessons of the past two years.’’

Robert Gavin can be reached at rgavin@globe.com.