No Super Fed Says Barney Frank

Looks like a moment of sanity is emerging from the House Financial Services Committee. Chair Barney Frank is quoted as saying the Federal Reserve will not be given regulatory expansion powers, instead, a super council of existing regulatory agencies, including the Federal Reserve will oversee systemic risk.

The Obama administration’s plan to expand the Federal Reserve’s powers to oversee financial firms is failing to win supporters in Congress as some lawmakers back a proposal to give the responsibility to several regulators.

“It’s going to be shared authority,” House Financial Services Committee Chairman Barney Frank, whose panel will write the measure, told reporters July 21, without providing details.

Frank and lawmakers leading discussion on regulatory reform fault the central bank for slow action on lending abuses and want the Fed to focus on monetary policy. Support is emerging for a council of the Fed, Treasury Department, Federal Deposit Insurance Corp. and other regulators. The Senate Banking Committee will consider the systemic-risk plan today.

“The more eyes on the problem the more likelihood that someone will raise an alarm,” Representative Spencer Bachus, top Republican on the House panel, said in a July 21 interview.

A long way to go, especially on disincentivizing, corporations to grow into too big to fail institutions, but a good sign. Lord knows they are having expert du jour testimony as input to craft reforms.

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Wall Street Loves the Fed.

That is why the Obama Administration proposed the Fed as super cop. But the Administration is not giving up on the Fed Super-Cop idea [from the same article]:

White House National Economic Council Director Lawrence Summers said it was too early to dismiss the Fed idea.

“I think it’s way premature to be talking about anything like that,” Summers said in a July 20 interview with Bloomberg News. “We’re very focused on what we think is the best way to contain these risks.”

Oh Larry, fighting for the financial oligarchy to the very end.