Lawmakers question whether Federal Reserve is best suited to be super financial regulator

Lawmakers wonder if Fed is best mega-regulator

WASHINGTON — Senior lawmakers are questioning the Obama administration’s plan to task the Federal Reserve with monitoring firms deemed so big and influential that their demise could hurt the economy.

Sen. Richard Shelby of Alabama, the top Republican on the Senate Banking Committee, sharply questioned Treasury Secretary Timothy Geithner on the proposal, which he says represents a “grossly inflated view” of the Fed’s expertise.

Sen. Christopher Dodd of Connecticut, the panel’s Democratic chairman, says he hasn’t decided yet whether it makes sense. He asked Geithner whether the Fed has too many responsibilities already and if the Fed’s “track record” in failing to prevent the economic crisis would be a problem.

Geithner defended the plan, saying the Fed is the best option and that one organization must become accountable.