Dodd Proposes Removing Fed, FDIC Bank Oversight Power

Dowd must be really worried about re-election, because he's actually doing something useful, and apparently ready to take on the powers that be.

F**k the Federal Reserve. The less power they have the better.

Get rid of the Fed. http://endthefedusa.ning.com/

Dodd Proposes Removing Fed, FDIC Bank Oversight Power (Update1)
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By Alison Vekshin

http://www.bloomberg.com/apps/news?pid=20601087&sid=azpMQ8Bmouo0&pos=3

Nov. 10 (Bloomberg) -- Senator Christopher Dodd proposed creating a single U.S. bank regulator and stripping supervision from the Federal Reserve and Federal Deposit Insurance Corp. in legislation aimed a preventing a repeat of the credit crisis.

Dodd, chairman of the Senate Banking Committee, would eliminate the Office of the Comptroller of the Currency and the Office of Thrift Supervision and fold the Treasury Department units into the Financial Institutions Regulatory Administration, according to draft legislation obtained by Bloomberg News. The Connecticut Democrat will release the plan today in Washington.

“It makes sense to have one regulator that deals with supervision,” Gilbert Schwartz, a former Fed attorney and a partner at Washington law firm Schwartz & Ballen LLP, said in an interview. “You’ll see a real battle by the Fed and the FDIC to retain their supervisory authority.”

Dodd has said the U.S. bank regulation system may have led to lax oversight by encouraging a “race to the bottom” by agencies to win oversight of banks and thrifts. His measure goes further than proposals by President Barack Obama and House Financial Services Committee Chairman Barney Frank to merge the OTS and OCC as part of efforts to prevent recurrence of the worst economic crisis since the Great Depression.

Dodd’s bill also creates a Consumer Financial Protection Agency to maintain market stability and a mechanism for the FDIC to unwind failing “systemically significant” financial firms. Costs for unwinding firms would be recouped from companies with more than $10 billion in assets, according to a summary of the proposal obtained by Bloomberg News.

Independent Chairman

The new banking regulator would be led by an independent chairman appointed by the president and a board including leaders of the Fed, the FDIC and two other independent members. It would be funded primarily by assessments on the industry.

The changes would let the FDIC focus on its responsibilities as deposit insurer and resolver of failed firms while the Fed would focus on monetary policy “without being distracted by responsibilities for bank oversight and consumer protections,” according to the summary.

Dodd proposed an Agency for Financial Stability to monitor and alleviate systemic risks posed by large, complex firms. The agency would give regulators authority to break up large firms deemed to pose a threat to U.S. financial stability.

Stability Panel

The stability panel would be led by a nine-member board including an independent chairman appointed by the president, and members from regulators including the Fed, the Treasury and the new Consumer Financial Protection Agency.

Dodd, who is seeking re-election next year, is releasing his proposal after failing to reach a compromise with Senator Richard Shelby, the banking committee’s top Republican whose support would ease passage of the legislation in the Senate. Shelby of Alabama opposes setting up a standalone Consumer Financial Protection Agency.

Dodd’s measure aims to enact the plan Obama released in June for strengthening U.S. oversight of Wall Street to prevent a repeat of the financial crisis following the collapse of the subprime mortgage market in 2007. He said on Nov. 4 his panel will weigh changes to his proposal in coming weeks before a vote that would send it to the full Senate.

The House Financial Services Committee approved legislation to set up a consumer agency, tighten rules for derivatives and require federal oversight of hedge funds. Frank, a Massachusetts Democrat, has said he expects the full House to vote on his regulatory package this year.

The regulatory-overhaul legislation must be passed by the House and Senate and signed by the president to become law.

-- Editors: Gregory Mott, Steve Dickson

To contact the reporter on this story: Alison Vekshin in Washington at avekshin@bloomberg.net.
Last Updated: November 10, 2009 11:45 EST

 

Dodd? That POS PotLicker should be tarred and feathered.. run out of town on a rail... he's as guilty as anybody...

 

Sounds like good medicine for many of his colleagues in the Senate and the House.