Putting the Fed in charge of regulating anything is absolutely wrong

[JDPriestly]

From Yahoo:

Federal Reserve Chairman Ben Bernanke ran into skepticism Tuesday from lawmakers wary of expanding the Fed's duties to police big financial companies. They argued that the Fed failed to spot problems that led to the financial crisis in the first place.

"The Fed has made some big mistakes," said Rep. Spencer Bachus, R-Ala., ranking member of the House Financial Services Committee.

An Obama administration proposal to make the Fed the supercop of globally interconnected financial companies would be "just inviting a false sense of security that inevitably will be shattered at the expense of the taxpayer," Bachus warned.

Bernanke countered that the administration's proposal would be a "modest reorientation" of the Fed's powers, not a great expansion of them.

. . . .

http://finance.yahoo.com/news/Bernanke-says-Fed-can-take-on-apf-2960346446.html?x=0

Think about it. The SEC has legislative, judicial and executive functions. It is a kind of hybrid under our Constitution. The courts have acknowledged that the legislature has the authority to delegate some of its authority to agencies like the SEC endowing them with what are called quasi-legislative, quasi-judicial and quasi-executive powers.

Thus, the agencies that exist are managed by the executive branch but, because they have legislative and judicial functions are also subject to the influence and oversight of Congress and the judiciary.

Now, where does the Fed figure into that picture? It is not an agency formed in the normal way. But the head of the Fed is appointed by the president you say and appears before Congress. In a sense, but what is the relationship between the Fed and the big banks. It is not the same as the relationship of an agency like the SEC in that the Fed has a tradition of close affiliation with the banks combined with secrecy. Today we see the Fed chair telling Congress that he cannot account to them for the disposition of huge amounts of government lent money. Do we really want an agency that arrogant to be in charge of regulating any aspect of our economy?

The Fed is not a democratic institution. It does not see as one of its priorities a duty to answer to any democratic or elected institution. Putting the Fed in charge of anything would be a huge, huge irreversible mistake.

The fight over healthcare is very important, but with these guys you always have to watch what little magic tricks they are pulling behind stage while they are entertaining you with pulling rabbits out of hats on stage because the big stuff, the important stuff is always happening where we do not see it.

We do need more regulation. And one of the entities needing more regulation is the Fed itself. Putting the Fed in charge of regulating financial institutions would be like putting a fox in charge of the hen house or a thief in charge of the bank (Woops, that's the situation as it is!). This must be stopped.

[Hydra]

1. No one argues that the Fed, Goldman and a few others

Who are currently lapping up the cream did not cause this problem- why are they being pushed forward to keep it from happening in the future???

[JDPriestly]

3. Precisely. They are part, probably the main part, of the problem.

[hedgehog]

2. Without engaging in any conspiracy theories, but isn't the

Fed meant to control the money supply to achieve a certain outcome? For example, full employment is not a goal of the Fed, zero inflation is. Maybe it's time to re-tool the Fed.

[LiberalAndProud]

4. The Fed is complicit in the current crisis.

Somebody needs to reign that institution in.