Fed wins in Dodd shake-up
THE Federal Reserve would take on a greatly expanded role in financial regulation under new legislation unveiled yesterday by a top US Senate Democrat, in a push to move ahead with the regulatory reform that has been a top priority of President Barack Obama.
The bill by Senator Christopher Dodd would give the Federal Reserve, the US central bank, the power to break up big firms that could threaten the stability of the financial system if they suffered serious problems.
The Fed would also gain authority over the nation’s largest bank-holding companies and become the home to a new consumer watchdog with oversight on mortgage-related businesses and some large non-bank financial firms, such as insurers.
Dodd released the 1,336-page bill less than a week after efforts at a bipartisan compromise broke down. Lawmakers have been arguing for months about regulatory reform following the worst financial crisis in generations that tipped the economy into a deep recession that reverberated globally.
In addition to addressing concerns over how to maintain the financial system’s stability, the bill takes aim at regulating the risky financial instruments that have been blamed for contributing to the financial crisis and protecting consumers from risky financial products that have also been blamed for their role in the crisis.
The future of reform legislation, however, remains uncertain, with Republicans and bank lobbyists working to weaken or block new rules. But with November mid-term elections near, the White House and Dodd are gambling that Republicans will shy away from killing the bill.
reform for fear of being painted as close allies of the deeply unpopular financial services industry.
Obama on Monday welcomed the Dodd legislation and promised to fight any efforts to water it down. “This proposal provides a strong foundation to build a safer financial system,” the president said in a statement.
“As the bill moves forward, I will take every opportunity to work with Chairman Dodd and his colleagues to strengthen the bill and will fight against efforts to weaken it.”