Dodd proposes abolishing the Fed

[Balog]

Sadly for the Paulistinians, he's proposing something even worse.

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/6539819/Single-US-banking-regulator-proposed.html


Single US banking regulator proposed

The Federal Reserve should be stripped of the bulk of its banking regulation powers and hand them to a new banking regulator, according to draft legislation being proposed by a powerful US Senator.
 

By James Quinn, US Business Editor
Published: 9:42PM GMT 10 Nov 2009


A powerful US senator is proposing the Federal Reserve, pictured, is stripped of the majority of its regulatory powers

Senator Chris Dodd, chairman of the influential Senate Banking Committee, believes that both the Fed and the Federal Deposit Insurance Corporation should have the majority of their involvement with bank regulation removed.

In their place, Dodd proposes, should come a new regulator, the Financial Institutions Regulatory Administration (FIRA), which would also take on the work of two smaller financial regulators – the Office of the Comptroller of the Currency and the Office of Thrift Supervision.
 
Senator Dodd's aim is to eliminate what he calls the "alphabet soup of multiple bank regulators that has led to weak, confusing regulation where it's easy for problems to fall through the cracks and difficult to know who is responsible."

His proposals are the most wide-reaching in addressing some of the root causes of the financial crisis, and go much further than existing proposals backed by the US Treasury.

To date, existing regulators have opposed a single super-regulator, but Senator Dodd argues that placing all banking regulation under one roof will stop banks and other financial institutions from shopping around different regulators dependent on the ease of their regulations.

His proposals also include the creation of an independent systemic risk regulator, which would not be part of the Fed, as will be the case under the existing US Treasury proposals.

The risk regulator would have the power to break up banks deemed "too big to fail," and would monitor the impact of institutions on the financial stability of the US.

Senator Dodd's bill goes further than that of Congressman Barney Frank in this area, whose Treasury-backed legislation calls for the mechanism for the financial industry to bail out a large institution once it has failed.

[Hawkmoon]

Smooth. This suggests to me that he recognizes he has a snowball's chance in Hell of reelection, so he won't be getting any more perks from the system. So as his swan song he proposes legislation to plug all the loopholes he has availed himself of all these years.

Once a slime ball, always a slime ball. The apple doesn't fall far from the tree.

[Waitone]

Dodd is Big Bank's man in congress.  If Dodd wants it you can bet Big Bank wants it.  Now the question to ask is why does Big Bank want the "reforms" Dodd is pushing?

[RocketMan]

Dodd is Big Bank's man in congress.  If Dodd wants it you can bet Big Bank wants it.  Now the question to ask is why does Big Bank want the "reforms" Dodd is pushing?

Because the big banks will have fewer government agencies to lobby and influence to get what they want.

[Sergeant Bob]

I propose abolishing Dodd, along with about 3/4 of the rest of the yahoos in D.C.

Because the big banks will have fewer government agencies to lobby and influence to get what they want.

It is always cheaper to get the milk straight from the cow.

[dm1333]

I propose abolishing Dodd, along with about 3/4 of the rest of the yahoos in D.C.

As a resident of the Constitution state I heartily agree. 

[MechAg94]

Senator Dodd's aim is to eliminate what he calls the "alphabet soup of multiple bank regulators that has led to weak, confusing regulation where it's easy for problems to fall through the cracks and difficult to know who is responsible."

Isn't he one of the Dems who blocked attempts to get ahead of the current financial mess a couple years ago? 

[makattak]

Isn't he one of the Dems who blocked attempts to get ahead of the current financial mess a couple years ago? 

What!? No! Democrats did nothing to stop regulating the financial mess.

Haven't you read the papers? It's ALL BUSH'S FAULT!

[Unisaw]

Not to cause thread drift, but your title is a little misleading.  Nothing in the article indicates that the Fed would be abolished.  It presumably would retain its other responsibilities (e.g., the Fed Open Market Committee would continue to control short-term interest rates).

I oppose the idea of a super-regulator, especially if it is the Fed.  Simply put, a single regulator would increase systemic risk: if its policy decisions are wrong, all financial institutions would be affected.