Dodd's Dud gives the Fed new powers
For those who think that the Fed has too much power already. Dodd wants to give it more. Dodd would increase the power of the Fed in the following ways (See http://bit.ly/bb7D3J):
- The bill would reduce the asset threshold of bank holding companies that fall under the benevolent eye of the Fed from 100MM to 50MM. This increases the number of holding companies falling under the Fed's regulatory hand by 56%, and includes such everyday names such as Huntington Bancshares and Marshall and Ilsley Corporation (See http://bit.ly/ceXLLY).
- The bill preserves the Fed's power over state-chartered banks with less than $50 billion in assets that are already in the Federal Reserve system.
- The bill empowers the central bank to supervise nonbank firms designated as "systemically important" by a council of regulators.
- Dodd is also planning to put a proposed financial consumer watchdog in the Fed. To win support among Democrats for the idea, he will give the watchdog considerable power and autonomy (See http://bit.ly/dwrTnV).
Don't get me wrong, I don't blame Ben Bernanke. He is probably as well informed an individual as there is on the economy. The problem is the system places more control and trust in one man (Bernanke), or one institution (The Fed) than the millions of individuals that make up the market.
The ultimate conceit is to imagine that one institution, the Federal Reserve, would be smarter than the entire market, especially given that the Fed failed to spot the housing, and credit bubble in the first place. See the video of the most informed man in the world getting schooled by the millions that makeup the market.