Congress Wants to Boost Fed's Oversight Role

But giving the agency power could stretch it thin, expose it to politics
By Jim O'Neill,  Newser User
Posted Jan 26, 2009 9:01 AM CST
House Financial Services Chairman Rep. Barney Frank, D-Mass.   (AP Photo/Haraz N. Ghanbari)
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(Newser) – The Federal Reserve would become more powerful under a congressional plan to give it increased oversight of banks, investment firms, insurance companies, hedge funds, and other firms that have enough economic clout to affect the entire US financial system, reports the Washington Post. “We need to give some regulator the power to restrain risk-taking that is excessive,” says Democrat Barney Frank.

The Fed would be required to have a picture of the economy as a whole, and be responsible for maintaining its stability through oversight and regulation. But critics are concerned the Fed may get too much power, and stray from its traditional mission of setting monetary policy—stretching it too thin and bringing political exposure to which it’s supposed to be immune.