What's this I hear about the "reform" bill limiting the Fed's regulation authority to large banks?
The Fed currently uses data from smaller banks to help assemble reports tracking the health of the economy. The regional banks' "Beige Books" take into account inputs from many local sources, including contacts in the financial community.
Arbitrarily limiting the Fed's authority to large banks makes little economic sense. This is probably a political ploy, but who benefits? The TBTF institutions would probably like having their own dedicated case manager at the Fed who isn't distracted by demands from smaller banks. This would make it easier for Goldman Sachs et al. to dump degraded mortgage assets on the Fed when it's time for the next bailout.
I guess community bankers didn't spend enough on campaign contributions to members of the Senate Banking Committee. They have every right to worry that regulatory favoritism will be shown to larger competitors if this "reform" bill becomes law.
A bill sponsored by Senate Banking Committee Chairman Christopher Dodd of Connecticut would limit the Fed’s authority to 36 of the country’s largest banks, those with assets of at least $50 billion, tying the Fed nameplate to firms such as Goldman Sachs Group Inc. and JPMorgan Chase & Co.
The Fed currently uses data from smaller banks to help assemble reports tracking the health of the economy. The regional banks' "Beige Books" take into account inputs from many local sources, including contacts in the financial community.
Arbitrarily limiting the Fed's authority to large banks makes little economic sense. This is probably a political ploy, but who benefits? The TBTF institutions would probably like having their own dedicated case manager at the Fed who isn't distracted by demands from smaller banks. This would make it easier for Goldman Sachs et al. to dump degraded mortgage assets on the Fed when it's time for the next bailout.
I guess community bankers didn't spend enough on campaign contributions to members of the Senate Banking Committee. They have every right to worry that regulatory favoritism will be shown to larger competitors if this "reform" bill becomes law.
