More Power for the Fed

Obama’s new reform plan suggests that the Federal Reserve be designated as a financial “super regulator”.

I would pose the question, should we really be giving the fed more powers than it already has?  They haven’t exactly demonstrated wonderful judgement up to this point. The fed isn’t exactly alone in it’s bad judgement, but it’s bad judgement none the less.

I honestly think that the fed already has powers of regulation that they failed to use in the past. Why are we trying to reinvent the wheel here?

Tim Geithner tried to reassure congress by saying that the new fed powers are "quite modest" and "carefully designed." I am sure they are very carefully designed. Carefully designed to add on to all the powers that the fed has already assumed over the past year.

Perhaps these officials should focus on the instruments and regulate those and focus less on institutions. They were about 20 years late on Credit Default Swaps and that is truly the center of this entire crisis. Not to mention the overall theme of greed. When house prices were going up 20 percent a year there was no interest of regulation to be found. However, once hedge funds complain about the bad mortgages they bought and money is lost, people started paying attention. Nevermind that it took two years from that point for any real action. There was just a lot of talk that there would be a recovery soon. Ignorance is bliss, until it’s followed by an economic meltdown.

I would submit that the best regulator of all would be getting rid of too big to fail. If a business that made poor investments went under and took the money with it, perhaps wall street would pull itself together and get back in the business of due dilligence. People may complain about how difficult it is to get a loan, and the reason it’s difficult is because the bank needs to be sure you will be reasonably likely to pay back the loan. Imagine that, quite a concept.

There are existing laws that would allow for regulation they just need to be enforced. We do not need a super regulator. The existing regulators just need to do their jobs.