Federal Reserve to retain big bank oversight powers

9 March 2010

The Federal Reserve (Fed) will retain control of regulatory powers for banks with more than $100 billion in assets, the Financial Times reported.

Congress has been debating whether to hand this responsibility to a single regulator as one of a number of reforms planned for the industry.

However, according to sources close to the matter, proposals to strip the Fed of these powers have fallen through.

Timothy Geithner, secretary and former president of the New York Fed, was one of the most vocal supporters of proposals for the organisation claiming that it was the only body qualified to undertake the role.

Chris Dodd, chairman of the senate US Banking Committe, is now expected to announce that regulation of the bigger banks will remain with the Fed, the FT reported.

An unnamed banking industry figure told the news provider: “Until, frankly, chairman [Ben] Bernanke was confirmed I think the Fed’s hands were kind of tied. Now he is chairman for the next four years ... the Fed has been able to be more aggressive in fighting for its authority.”

Previously, Mr Dodd described the regulator as an “abysmal failure” in its attempts to monitor the banking industry.

By Jim Ottewill

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