Ex-NY Governor Spitzer faults Fed and SEC

Former New York Governor Eliot Spitzer speaks on a panel discussion of the post-crisis economy during a forum entitled 'Inflection Point: Washington & Wall Street in the New Financial System,' presented by The New Republic magazine in Washington, September 14, 2009.

WASHINGTON (Reuters) - Former New York Governor Eliot Spitzer criticized the Federal Reserve and other U.S. agencies with consumer protection duties in an interview with Reuters Television on Monday.

Eighteen months since he quit as governor after an embarrassing personal scandal, Spitzer was in Washington, D.C., as a guest on a panel discussing the Obama administration's financial regulation reform proposals.

One of these is to put the Federal Reserve in charge of overseeing systemic financial risk in the economy, in conjunction with an interagency council of regulators.

Some lawmakers are skeptical of giving the Fed so much power in view of its past record -- concerns Spitzer shares.

"The Fed is one of those agencies that utterly failed over the last decade and we have to recognize that fact," he said.

In addition, he said, the administration is not pushing hard enough on resolving the "too big to fail" issue -- the concern that the 2008-2009 financial bailouts created a class of mega-banks and companies with implicit government support.

He said he does not disagree with the administration's proposal to create a Consumer Financial Protection Agency to oversee credit cards, mortgages and other financial products.

President Barack Obama proposes stripping several existing agencies of consumer protection duties and consolidating them within the new consumer agency. The banking industry opposes the plan.

"The problem that I have is that this seems to let off the hook the agencies that supposedly were consumer protection agencies in the past," Spitzer said, singling out the Securities and Exchange Commission, the Office of Thrift Supervision and the Office of the Comptroller of the Currency.

Before he was governor, Spitzer was New York attorney general and frequently butted heads with the SEC. He stepped down as governor in March 2008. Earlier he admitted his

participation in a prostitution ring.

"Others have dropped the ball and we should examine why that happened. Creating a new entity, if you put someone like Elizabeth Warren in charge, spectacular. I think she is one of the few people out there who is really speaking to these issues and providing real insight," he said.

Warren, a Harvard Law School professor, chairs a congressional watchdog panel overseeing the bailouts. She is sometimes rumored as potential head of Obama's proposed CFPA.

At the time, his political star was rising and he was seen by some fellow Democrats as a possible presidential candidate.

Asked about his personal plans and whether he is on the political comeback trail, he said, "I'm out here occasionally when asked, just showing up and lending my views ... I'm running a family business and participating."

(Reporting by Kevin Drawbaugh; Editing by Kenneth Barry)