Newspaper article The Washington Times (Washington, DC)
Byline: Sean Lengell, THE WASHINGTON TIMES
Lawmakers warned Treasury Secretary Timothy F. Geithner on Thursday that President Obama's plan to greatly expand the Federal Reserve's powers to oversee financial markets might overburden the central bank and lead to future problems on Wall Street going unchecked.
Members of the Senate Banking, Housing and Urban Affairs Committee generally agreed with Mr. Obama's push announced Wednesday to create an oversight agency to protect consumers and investors from unscrupulous deals, but the senators expressed unease with some of the details.
The secretary's appearance on Capitol Hill came a day after the Obama administration unveiled sweeping regulatory reforms of the nation's financial system - a plan widely criticized on Wall Street and by leading financial industry lobbies.
The committee's top Republican, Sen. Richard C. Shelby of Alabama, said he was concerned about giving more duties to the Federal Reserve, which already sets monetary policy and regulates banks among other functions.
I do not believe that we can reasonably expect the Fed or any other agency to effectively play so many roles, he said.
Mr. Shelby added that because Congress has limited oversight control over the central bank, it would be unwise to hand it additional responsibilities.
New York Democratic Sen. Charles E. Schumer, whose state contains the nation's leading financial hub, said the administration's plan should include greater consolidation of regulatory agencies.
A multiplicity of regulators tends to produce less oversight overall, Mr. Schumer said.
But Mr. Geithner said that because the Fed already supervises and regulates bank holding companies, including all major U.S. commercial and investment banks, it makes sense to convert the agency into a super-regulator that would oversee financial firms deemed too big or too critical to the economy to fail.
Our plan gives a modest amount of additional authority - and accountability - to the Fed to carry out that mission, he said. …