The ballooning Fed

Congress might give the Federal Reserve regulatory power.

If taxpayers are not outraged that their government handed inconceivable amounts of their cash to large and failing banks while getting nothing in return, a new piece of legislation should serve to spark the ire of citizens. This spring, Barney Frank, D-Mass., will reportedly introduce legislation that could effectively seek to make the Federal Reserve a financial regulator. If passed, Congress would charge the Fed to pry into the inner-workings of banks, hedge funds and other money managing firms, whose role in digging the global economy into the largest financial crisis since the Great Depression is apparent. The purpose of FrankâÄôs regulation is to make the Fed into a policing agency of sorts, apparently protecting the health of the U.S. financial system. But the Fed is an independent monetary-creating institution and has also played a shameful role in sparking the financial crisis. Furthermore, the logical conclusion of this legislation is that it would circumvent the concept that Congress should oversee monitoring agencies. Critics of the proposal argue that with regulatory power, the Fed would work more in favor of large financial companies because they pose as more of a danger to the financial system if they fail. But Frank himself has been a sharp critic of the Fed, once threatening to remove its consumer protection powers. Just leave it to our forgetful elected officials to stamp the Fed with the now infamous too big to fail label. FrankâÄôs proposal, however, has yet to be penned, and he is also considering giving the power to a new and separate agency âÄî a much more feasible concept. In an era of big bailouts of big banks, concentrated size and power should be counterintuitive.