Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

Fed's independence at risk - Dodd

The Senate Banking Committee chairman says increasing the central bank's regulatory oversight puts its independence in jeopardy.

EMAIL  |   PRINT  |   SHARE  |   RSS
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)

What's most important to you when choosing where to live?
  • Good jobs
  • Affordable homes
  • Top schools
  • Low crime
  • Things to do
Bailout tracker
Follow the money: Bailout tracker
The government is engaged in a far-reaching - and expensive - effort to rescue the economy. Here's how you can keep tabs on the bailouts. More

WASHINGTON (Reuters) -- Senate Banking Committee Chairman Christopher Dodd said Tuesday that making the Federal Reserve a "systemic risk" regulator could put the U.S. central bank's independence at risk.

"I think those who are advocating the Fed's role in all of this as a systemic risk regulator ought to be prepared to then concede a good chunk of independence of the Federal Reserve," Dodd told reporters. "I think that poses some serious issues."

"If you give them that kind of authority here there will be demands for far more congressional authority over the Fed," he said.

The Obama administration has proposed giving the Fed responsibility for supervising large, interconnected firms whose collapse could jeopardize the entire financial system as part of a broad revamping of U.S. financial regulation.

Dodd, who will play a big role in crafting regulatory reform legislation, has voiced support for the idea of establishing a council to monitor systemic risks. The Obama plan would set up a council of regulators that would help identify the firms to be regulated by the U.S. central bank.

The Fed is facing heightened scrutiny on Capitol Hill for the role it has played in bailing out financial firms.

Last week, the Fed's No. 2 official, Vice Chairman Donald Kohn, told Congress efforts by some lawmakers to open up the central bank's monetary policy and emergency lending decisions to audits would raise the risk monetary policy decisions would become subject to politics. To top of page

They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
More Galleries
Driving the ultimate in '50s Mercedes-Benz style The SC was the car that re-introduced Mercedes-Benz as a global luxury car icon. More
Driving the world's first car Driving a replica of the 1886 Benz Patent Motorwagen, the first internal combustion automobile. More
Your guide to Cyber Monday sales This year, more Cyber Monday sales than ever start well before Monday. Here's where to shop if you don't get your fill on Black Friday. More
Worry about the hackers you don't know 
Crime syndicates and government organizations pose a much greater cyber threat than renegade hacker groups like Anonymous. Play
GE CEO: Bringing jobs back to the U.S. 
Jeff Immelt says the U.S. is a cost competitive market for advanced manufacturing and that GE is bringing jobs back from Mexico. Play
Hamster wheel and wedgie-powered transit 
Red Bull Creation challenges hackers and engineers to invent new modes of transportation. Play

Copyright 2009 Reuters All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.