WASHINGTON May 4 A Republican senator has
readied an amendment to financial reform legislation that would
leave the Federal Reserve in charge of regulating thousands of
Proposed legislation crafted by Senate Banking Committee
Chairman Christopher Dodd, which the full Senate is now
debating, would put the Fed in charge of overseeing
institutions with assets greater than $50 billion, but strip it
of small bank supervision.
That new role would leave the U.S. central bank policing
about 50 big financial firms but authority over more than 5,000
others would be handed off to other bank regulators. Dodd and
others say the Fed's regulatory lapses failed to limit risky
practices that triggered a damaging financial crisis and
Senator Kay Bailey Hutchison's amendment would keep the Fed
as supervisor of smaller banks. Co-sponsors of her amendment,
which hasn't reached the Senate floor, include Minnesota
Democratic Senator Amy Klobuchar and eight Republicans, a
Hutchison aide said.
"If the Fed supervises only the largest firms, it will gear
monetary policy toward these large financial institutions,"
said Hutchison, who is a member of the banking committee.
Other lawmakers have also backed keeping the Fed in charge
of supervising community banks, as have various Fed policy
Federal Reserve officials have argued that the U.S. central
bank's supervision of small banks helps policy makers keep
their finger on the pulse of the U.S. economy.
Top officials of the 11 regional Fed banks outside
Washington and New York have been particularly vocal in
pressing lawmakers to maintain their oversight of banks in
(Reporting by Mark Felsenthal; Editing by Leslie Adler)