* Dodd "close" to unveiling new financial reform bill
* Consumer agency needs rulemaking authority- Dodd
* Appropriate to give regulators power to eye prop trades
WASHINGTON, Feb 26 The U.S. Senate's chief
architect of financial regulation reform said on Friday the
Federal Reserve may "not necessarily" lose its authority to
supervise banks, signaling a potential shift in his thinking.
As he searches for compromises to win support for a
landmark financial regulation bill, Senate Banking Committee
Chairman Christopher Dodd told Bloomberg TV the Fed may retain
some of its historic role in supervising banks.
That would be a big change from Dodd's initial regulatory
reform proposal released in November, which called for creating
a new super-cop for banks that would have taken over the
banking oversight duties of the Fed and other agencies.
Dodd is expected to release a new bill next week that
reflects long negotiations with Republican Senator Bob Corker
and other lawmakers on an issue that is a top priority of the
Obama administration -- tighter financial regulation.
Banking committee members have criticized the Fed ever
since the financial crisis, saying the central bank failed to
keep a close enough eye on the U.S. banking industry.
There had been a growing consensus on stripping the Fed of
its banking supervision and consumer protection roles, leaving
it focused chiefly on monetary policy and acting as the lender
of last resort. But Dodd's comments suggested he may be open to
allowing the Fed to oversee banks, after all.
The Fed's role and the fate of a White House proposal to
create an independent consumer financial protection agency hang
in the balance as Dodd's panel crafts a new bill.
Republicans are opposed to a separate consumer agency and
Dodd has been forced to back down. He has been considering a
consumer division housed in another federal agency.
Dodd would not say whether he would place the consumer
division within the Treasury Department or a consolidated
banking regulator. "I'm more concerned with what powers it
has," Dodd told Bloomberg.
Dodd said the consumer supervisor had to have some
rule-making authority and prudential and consumer regulators
should have a "consultative role". "That's true both on
rulemaking and enforcement," Dodd said.
The Obama administration is also pushing for rules to rein
in banks' risky activities and proprietary trading. Dodd said
it was "appropriate" for regulators to look at proprietary
(Reporting by Rachelle Younglai; Editing by Andrew Hay)