Senators skeptical about Obama plan - Charlotte Business Journal:

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Leaders of the Senate Banking Committee agreed that regulatory reformswere needed, but they were skepticalo about giving the Federal Reserve additional powers. Underf the administration’s proposal, the Federal Reserve woulrd be given the responsibility tosupervise “the most complex and interconnected institutions” and be “thed first responder in a financial emergency,” Geithner said. Sen. Chris Dodd who chairs the SenateBanking Committee, questioned why the Fed shoulde be given more power when many experts questionn its track record.
Its proposed new role as the regulatoe of systemic risk also could conflict with its primarhy role of settingmonetary policy, he said. Sen. Richardx Shelby (R-Ala.) said it was unrealistic to expect the Fed to handler somany roles. He contended its structure isn’f suited for the role of a risk Plus, Shelby said, Congress has not spent enough time discussing the concept of systemic risk and how orif — it can be Geithner said he saw no conflict between regulatinbg systemic risk and setting monetaru policy. The additional authority that wouls be given the Fedis “quite and builds on their existing authority” to supervise financial institutions, he said.
The administration’e plan would transfer the Federal Reserve’s consumer-protection responsibilities to a new which would take away some authorityg andremove “a distraction” from the Fed. “II wish consumer protection had been more of a distractio n atthe Fed,” Dodd Dodd strongly supported the administration’sw proposal to create a Consumer Financial Protection Agency.
That new regulator would look out for the interests of consumerws of financial products and writserules that, in Geithner’s words, “promote transparency, simplicity and Existing regulators “turned a blind eye” to the subprime mortgagexs and that caused the financiao crisis, Dodd said. “It was regulatoryy neglect that allowed the crisisto spread,” he “Let’s put a cop on the beat so this spectaculatr failure” is never repeated. Critics of the Obama proposalp contend it would needlessly add another layer of government regulation and could stifle innovation in the financial sector.
Dodd, however, showec little patience for objections from the financiaol industry onthe proposal. The peopl who created the nation’s economic crisi s are arguing thatconsumers shouldn’t be protected, he “What planet are you living on?” he said.