Last year , the House passed our financial services reform legislation that substantially preserved the Fed 's power to supervise these financial institutions .
Proponents of preserving robust Fed supervision authority cite three main points to support their position that the Fed should retain broad supervisory powers .
Under Senator Dodd 's proposal , the Fed would supervise 40 or 50 large banks , and the other 7,500 or so banks would be under the regulatory purview of other Federal and State banking agencies .
There are inherent conflicts of interest where the Fed might be tempted to conduct monetary policy in such a way that hides its mistakes by protecting the struggling banks it supervises .
The Senate bill recently introduced by Senator Dodd , however , would strip the Fed 's authority to supervise all but approximately the 40 largest financial institutions .
Despite this intense on-site presence , the New York Fed and the SEC stood idle while the bank engaged in the balance sheet manipulations detailed in the report .
Interest rates fixed by the Federal Reserve is price fixing , and it should have no part of a free market economy .
If this were to happen , the Fed 's focus on the mega banks will inevitably disadvantage the regional and community banks , and I think on this , Chairman Bernanke , you and I are in agreement , that there ought to be one regulator looking at all the institutions .
Vince Reinhart , a former Director of the Fed 's Division of Monetary Affairs and now a resident scholar at the American Enterprise Institution , said that collecting diverse responsibilities in one institution is like asking a plumber to check the wiring in your basement .
According to the New York Times , all this happened while a team of officials from the Securities and Exchange Commission and the Federal Reserve Bank of New York were resident examiners in the headquarters of Lehman Brothers .
By contrast , the regulatory reform legislation passed by the House in December represented a large expansion of the Fed 's regulatory role since its creation almost 100 years ago .
Third , proponents say that the Fed 's supervisory activities provide the Fed information about the current state of the economy and the financial system that influences the FOMC in its execution of monetary policy , including interest rate setting .
This raises serious questions regarding the capability of the Fed to conduct bank supervision , yet even if supervision of its regulated institutions improved , it is not clear that oversight really informs monetary policy .
It is worth examining whether the Federal Reserve should conduct monetary policy at the same time it regulates and supervises banks or whether it should concentrate exclusively on its microeconomic responsibilities .
I have tried to keep an open mind about the role of the Fed going forward , and hope to use today 's hearing to get more information as we move forward to discussions with the Senate , if the Senate ever passes a bill .
As many as a dozen government officials were provided desks , phones , computers , and access to all of Lehman 's books and records .
This hearing was called to examine the potential policy implications of stripping regulatory and supervisory powers over most banks from the Fed , especially the potential impact this could have on the Fed 's ability to conduct monetary policy effectively .
Yesterday was an important day because it was the day the FOMC met and the markets were hanging in there , finding out what will be said at 2:15 , and practically , they were looking for two words , whether or not two words would exist : `` extended period . ''
We will have an all-day hearing on Friday , February 5th , with borrowers and regulators and lenders , and we want to get into this question about why more loans are n't being made .
And I do think it is legitimate to inquire to the extent to which other opportunities to make a lot of money displace lending , either directly or indirectly .
You have to remember the most financially sophisticated banks ended up sitting on these AAA sub-prime securities that ended up coming back to haunt them .
And I think if we had somebody looking out across the system seeing those concentrations of risks and being able to adjust things like loan to value ratios in the housing market and also haircuts and margins on those securities , you would not have the deleveraging that I think was so dangerous . ''
When the mortgage-backed security -- when Fannie Mae packages the mortgage-backed securities , the Fed is a principal holder of mortgage-backed securities .
Chairman Bernanke , I would like to ask you about the inter-connectedness of Fannie Mae , which is owned -- the largest shareholder is the United States Government in conservatorship .
And that 's one of the reasons I am so interested in the Consumer Financial Protection Agency , because I think they can start to see these things in different ways than they have been seen in the past .
It was not until 2008 , well after the predatory mortgage loan products had done their damage , that the Fed finalized its rule-making for the Home Ownership and Equity Protection Act , which Congress passed in 1994 , mandating that the Federal Reserve prohibit unfair , deceptive , or abusive acts or practices in mortgage lending .
I am not going to get deeply into the consumer financial protection agency that has been talked about so much , and what 's happening with the Dodd bill .
They are calling my office every day -- and I am looking at an elderly couple who took out an interest-only loan and , after 5 years , that loan adjusts .