WASHINGTON, Feb 26 (Reuters) - The U.S. Senate's chief architect of financial regulation reform said on Friday the Federal Reserve may 'not necessarily' lose its authority to supervise banks.
Senate Banking Committee Chairman Christopher Dodd told Bloomberg TV there could be a compromise on the Fed's supervisory role in his new financial reform bill.
Committee members have been highly critical of the Fed after the central bank intervened repeatedly in the financial crisis to help troubled firms like insurer AIG.
There had been a growing consensus on stripping the Fed of its banking supervision and consumer protection roles, leaving it focused chiefly on monetary policy and acting as the lender of last resort. But Dodd's comments suggested he may be open to allowing the Fed to oversee banks, after all.
The Fed's role and the fate of the White House proposal to create an independent consumer financial protection agency hangs in the air as the Senate banking panel crafts a new bill.
Republicans are opposed to a separate consumer agency and Dodd has been forced to back down. He has been considering a consumer division housed in another federal agency.
Dodd would not say whether he would place the consumer division within the Treasury Department or a consolidated banking regulator. 'I'm more concerned with what powers it has,' Dodd told Bloomberg.
Dodd said the consumer supervisor had to have some rule-making authority and prudential and consumer regulators should have a 'consultative role'. 'That's true both on rulemaking and enforcement,' Dodd said.
The Obama administration is also pushing for rules to rein in banks' risky activities and proprietary trading. Dodd said it was 'appropriate' for regulators to look at proprietary trades.
(Reporting by Rachelle Younglai, Editing by Andrew Hay) Keywords: FINANCIAL REGULATION/FED (rachelle.younglai@thomsonreuters.com; +1 202 898 8411) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
Senate Banking Committee Chairman Christopher Dodd told Bloomberg TV there could be a compromise on the Fed's supervisory role in his new financial reform bill.
Committee members have been highly critical of the Fed after the central bank intervened repeatedly in the financial crisis to help troubled firms like insurer AIG.
There had been a growing consensus on stripping the Fed of its banking supervision and consumer protection roles, leaving it focused chiefly on monetary policy and acting as the lender of last resort. But Dodd's comments suggested he may be open to allowing the Fed to oversee banks, after all.
The Fed's role and the fate of the White House proposal to create an independent consumer financial protection agency hangs in the air as the Senate banking panel crafts a new bill.
Republicans are opposed to a separate consumer agency and Dodd has been forced to back down. He has been considering a consumer division housed in another federal agency.
Dodd would not say whether he would place the consumer division within the Treasury Department or a consolidated banking regulator. 'I'm more concerned with what powers it has,' Dodd told Bloomberg.
Dodd said the consumer supervisor had to have some rule-making authority and prudential and consumer regulators should have a 'consultative role'. 'That's true both on rulemaking and enforcement,' Dodd said.
The Obama administration is also pushing for rules to rein in banks' risky activities and proprietary trading. Dodd said it was 'appropriate' for regulators to look at proprietary trades.
(Reporting by Rachelle Younglai, Editing by Andrew Hay) Keywords: FINANCIAL REGULATION/FED (rachelle.younglai@thomsonreuters.com; +1 202 898 8411) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.