WTF? The cart is in front of the horse. There is so much BS that............
WASHINGTON (AP) –– Many lawmakers fear President Barack Obama's plan to prevent another financial meltdown might end up turning the Federal Reserve into an all-powerful monster –– a friction that could slow down a major overhaul of banking and market regulations.
In a speech on Wednesday, Obama is expected to propose that the Fed take on a role as America's financial supercop. Already the nation's central bank, the Federal Reserve would supervise large financial institutions that are considered so big that their failure could undermine the economy.
A council of regulators, which would include the Fed, would be established to monitor risk throughout the broader system.
The goal would be to prevent any more crashes like those that felled AIG and Lehman Brothers.
Obama said Tuesday the new rules will try to eliminate the kind of excessive risk-taking by financial institutions that proved "very dangerous to the American people."
"It's going to be, as usual, a heavy lift because there are going to be people who want to keep on taking these risks, counting on U.S. taxpayers to bail them out if their bets go bad," he said.
While Democrats generally agree, many oppose relying too heavily on the Fed.
They say its status as a politically independent organization would make it difficult to keep the newly empowered organization in check.
"What happens if the representatives of the people and the president want a certain action and it's not taken?" asked Rep. Paul Kanjorski of Pennsylvania, a senior Democrat on the House Financial Services Committee.
"You can't fire the chairman of the Federal Reserve," Kanjorski said.
Sen. Christopher Dodd, chairman of the Banking Committee, is likely to become Obama's toughest opponent.
In private deliberations with the administration, Dodd has advocated an alternative plan to strip the Fed of its regulatory role entirely. Dodd's plan would create a new consolidated bank regulator that would assume the roles that the Fed and Federal Deposit Insurance Corp. now play in helping regulate state-chartered banks.
Under this scenario, the Fed would focus on its existing mission as the nation's central bank –– setting monetary policy and acting as a "lender of last resort."
According to aides, key lawmakers including Dodd and the administration have agreed that the Fed should give up its oversight of consumer protection regulations. The administration will propose a new Consumer Financial Protection Agency, an independent office that would monitor financial products like credit cards, an Obama official said Tuesday.
Obama's decision to create the agency is in response to criticism that lenders and credit card companies have taken advantage of unwitting consumers and saddled them with debt.
Lawmakers, including Dodd, also say they are open to the administration's proposal that the FDIC be put in charge of dismantling financial institutions that the Fed and Treasury Department decide pose a threat to the economy.
Rep. Barney Frank, a Massachusetts Democrat and chairman of the House Financial Services Committee, has not taken a position on the administration's plan to bolster the powers of the Fed.
But other House members, including Republicans, say it's a terrible idea.
In a staff document circulated last week, House Republicans on the committee argued that expanding the Fed's responsibilities and increasing government spending pose "a far more significant source of 'systemic risk' to our nation's economy than the failure of any specific financial institution."
Obama said those calling to get government "off our backs" have a short memory.
"I think that's what some of the special interests and lobbyists are going to be counting on –– that somehow we've forgotten the disaster that arose out of their reckless behavior," he said.
Several lawmakers say they also want Obama's plan to go further in restricting compensation paid to financial executives at banks that accept government aid.
The brewing debate and industry opposition could threaten to derail plans to pass a major regulation package quickly.
Aides said this week that Dodd and Frank are still committed to sending Obama a bill to sign by the end of the year.
Rep. Brad Miller, a member of the House Financial Services Committee, said enacting meaningful change is likely to become a painful fight for everyone. But preventing another economic collapse in a way that doesn't rely on bank bailouts is a voter mandate, he said.
"The American people are fit to be tied about what has happened to keep the financial system afloat," said Miller, a Democrat from North Carolina.
Associated Press Writer Jim Kuhnhenn contributed to this report.
Will this be reported on ABC?
Put the people partially responsible for the problem in charge.
just what we need, more .gov dumbasses calling the shots....