Bernanke says Fed will share oversight role

FEDERAL Reserve chairman Ben Bernanke yesterday backed away from a controversial provision of President Obama&rsquo;s administration reform plan, saying new oversight by the Fed on &ldquo;systemic risk&rdquo; should be shared with other regulators.<br /><br />The key lawmaker told a congressional panel that a new council of financial regulators, not just the Fed, should monitor big-picture risks threatening the financial system.<br /><br />His comments come amid growing scepticism in Congress about an administration proposal to give the Fed the lead role in policing the economy for systemic risk.<br /><br />Bernanke&rsquo;s comments stressed the importance of such a council, especially in assessing the very broadest sort of risks posed by interactions of institutions and markets.<br /><br />Policymakers should also ensure that consumers are protected from unfair and deceptive practices in their financial dealings, he said.<br /><br />&ldquo;For purposes of both effectiveness and accountability, the consolidated supervision of an individual firm is best vested with a single agency,&rdquo; Bernanke said.<br /><br />But he added that the broader task of monitoring and addressing systemic risks that might arise from the interaction of different types of financial institutions and markets &ldquo;may exceed the capacity of any individual supervisor&rdquo;.<br /><br />The administration has been firm its determination to place more power in the Fed. But some critics point to the failure of the Fed, along with other regulators, to spot the threat to the financial system posed by overexposure of banks and others to the subprime housing market.