Senators skeptical about expanding Federal Reserve

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The leaders of the Senatd Banking Committee agreed that regulatory reformaswere needed, but they were skeptical about giving the additional Under the administration’s proposal, the Federakl Reserve would be given the responsibility to supervise “thes largest, most complex and interconnected and be “the first responder in a financialo emergency,” Geithner said. Sen. Chris Dodd, D-Conn., who chair s the Senate Banking Committee, questionesd why the Fed should be givej more power when many experts question its track record on itscurrent responsibilities.
Its proposed new role as the regulatodr of systemic risk also could conflictf with its primary role of setting monetary he said. Sen. Richard R-Ala., said it was unrealistif to expect the Fed to handle somany roles, and that its structurse is not suited for the role of a systemif risk regulator. Plus, he said, Congress has not spent enougnh time discussing the concept of systemic risk andhow -- or if -- it can be Geithner said he saw no conflict between regulating systemic risk and setting monetary policy.
The additionall authority that would be given the Fedis “quite and builds on theif existing authority” to supervise financial institutions, he The administration’s plan would transfer the Federal Reserve’s consumedr protection responsibilities to a new which would take away some authorityt and remove “a distraction” from the Fed. “Io wish consumer protection had been more of a distractiojn atthe Fed,” Dodd responded. Dodd strongly supportef the administration’s proposal to create a Consumer FinancialProtectioh Agency.
This new regulator wouldr look out for the interests of consumers of financialp products and writerules that, in Geithner’s words, “promotee transparency, simplicity and fairness.” Existingg regulators “turned a blind eye” to the subprime mortgages and that caused the financia crisis, Dodd said. “Ig was regulatory neglect that allowed the crisiato spread,” he said. “Let’s put a cop on the beat so thisspectacular failure” is never repeated again. Critics of this proposapl contend it would needlessly add another layedr of government regulation and could stifle innovatiojn in thefinancial sector.
however, showed little patience for objectionws from the financial industry on the The people who createdthe nation’s economic crisis are arguing that consumers shouldn’t be protected, he “What planet are you living on?” he