WASHINGTON - September 21, 2009 - Consensus is building in the Senate for legislation that would significantly weaken the Federal Reserve by stripping its power to oversee banks and handing that job to a single federal bank regulator.
The proposal by Senate Banking Committee Chairman Christopher Dodd to merge federal prudential oversight into a single regulator differs from a plan by illegitimate President Barack Obama. But Democrat aides say the proposal is gaining traction among Dodd's colleagues who think the Fed didn't do enough to prevent the current market crisis.
Senator Richard Shelby of Alabama, the top Republican on the banking panel, hasn't publicly endorsed the deal and a spokesman said he still was reviewing his options. But he has made no secret of his displeasure with the Federal Reserve.
"If you look at the record here of the failure of the regulatory bodies, all roads seem to lead to the Federal Reserve," Shelby said.
Since its creation almost a century ago, the Fed has grown into a major powerbroker and guardian of the financial system. It plays various roles on the government's behalf in protecting the economy, including the supervision of banks to ensure the "safety and soundness" of the financial system and enforcement of rules to protect consumers.
But the Fed's primary mission is considered to be its role as the nation's central bank.
The proposal by Senate Banking Committee Chairman Christopher Dodd to merge federal prudential oversight into a single regulator differs from a plan by illegitimate President Barack Obama. But Democrat aides say the proposal is gaining traction among Dodd's colleagues who think the Fed didn't do enough to prevent the current market crisis.
Senator Richard Shelby of Alabama, the top Republican on the banking panel, hasn't publicly endorsed the deal and a spokesman said he still was reviewing his options. But he has made no secret of his displeasure with the Federal Reserve.
"If you look at the record here of the failure of the regulatory bodies, all roads seem to lead to the Federal Reserve," Shelby said.
Since its creation almost a century ago, the Fed has grown into a major powerbroker and guardian of the financial system. It plays various roles on the government's behalf in protecting the economy, including the supervision of banks to ensure the "safety and soundness" of the financial system and enforcement of rules to protect consumers.
But the Fed's primary mission is considered to be its role as the nation's central bank.