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"The Fed Will Be a Less Powerful Institution," Rep. Barney Frank Says

Posted Jul 20, 2009 09:30am EDT by Aaron Task in Newsmakers, Banking
Related: XLF, SKF, FAS, FAZ, JPM, MS, GS
Ben Bernanke delivers his semi-annual report on the economy Tuesday in an atmosphere of intense political debate over the fate of the central bank.

One man at the center of the discussion, Congressman Barney Frank, chairman of the House Financial Services Committee, is an advocate of less power for the Fed, not more.

"The Fed will be a less powerful institution" when all is said and done, Frank says in the accompanying video exclusive, taped last week in Washington D.C.

Specifically, Frank supports:

  • The creation of a new consumer protection agency, which would strip the Fed of some current responsibilities. The Fed is the "biggest loser" if the agency comes to be, which Frank thinks it will despite still opposition from the banking lobby.
  • Ron Paul's effort to audit the Fed.
  • Eliminating Depression-era regulations that allow the Fed to lend to just about any distressed institution without needing Congressional approval.
  • Given the Fed more power to regulate leverage but doing the same for other agencies and not making the central bank the exclusive "systemic risk" regulator.

 

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