From Ashes of Recession, a Reshaped Fed Will Rise
The Fed stands to gain some powers and lose others
By Clay Dillow,  Newser Staff
Posted May 18, 2009 9:55 AM CDT
The Federal Reserve Building on Constitution Avenue in Washington is seen Friday evening, March 27, 2009, in Washington.   (AP Photo/J. Scott Applewhite)
camera-icon View 1 more image

(Newser) – Among the myriad things that will be reshaped by the current economic crisis is the Federal Reserve, the Wall Street Journal reports. The steps the Fed has taken to stave off further economic turmoil have made it more vulnerable than it has been in years: If a lasting recovery takes hold, the 21st-century Fed may gain some important new powers—including the authority to regulate financial institutions, other than banks, that are so big they put the system at risk.

But massive bailouts and conflicts of interest may cost it the power to lend unchecked in emergencies and regulate consumer-finance activities. And Congress may mount an assault on the Fed's independence, the Journal says, especially a law that lets commercial banks name people to the boards that oversee the regional Fed banks.