Sen. Christopher Dodd (D-CT) introduced his 1,100-page proposal for regulating the financial markets. Dodd calls for a complete overhaul of the current regulatory structure and, wait for it … more government control.
Essentially, the plan calls for stripping the Federal Reserve of its power to regulate banks and make emergency loans to companies, while adding greater government oversight into the Fed’s emergency programs, which have been on overdrive during the financial meltdown. Furthermore, Dodd wants Congress and the White House to have greater control over the appointment of the directors of the 12 regional Fed banks. Currently, private bankers choose six of the nine directors for each bank. If Dodd has his way, all the Fed will be doing in the future is setting interest rates, and it will be completely answerable to the president and the Senate to do even that much.
We’re not defending the track record of the Federal Reserve, but critics of Dodd’s plan — and there are many — say that the Fed cannot effectively set interest rates without holding regulatory sway over private banks. Similarly, his plan to strip away the supervisory role of the Federal Deposit Insurance Corporation will leave it a shell of its former self. It should be clear that this is yet another power grab. Dodd wants us to believe that since the regulatory structure already in place couldn’t stem the current financial crisis, the federal government should have control over every aspect of the financial sector. If every member of the Federal Reserve Bank is a political appointment, imagine what additional tripe will be pedaled for truth about our economy.