Federal Reserve Chairman Ben Bernanke revived his fight against Senate efforts to remove the Fed from banking supervision.
Bernanke, wrote to Congress Thursday arguing that removing the Fed from the making influential decisions would strip the central bank of information influential on interest rates to make gauging overall economic activity more difficult.
Bernanke made the point in the paper stating, "Elimination of the Federal Reserve's role in supervision would severely undermine the Federal Reserve's ability to obtain in a timely way and to evaluate the information it needs to conduct its central banking functions effectively."
Certainly the Fed’s access to immediate information helped them react in a timely manner by adjusting the interest rate near zero during the financial crisis which helped revive the economy from its worst point.
The Fed’s control over inflation will also be abbreviated once they no longer have immediate access to vital information. Monitoring changes will become increasingly difficult and in Bernanke’s opinion have a negative effect on the still floundering economy.
That still floundering economy is what leads Senate Banking Committee Chairman, Christopher Dodd, D-Conn., to reject Bernanke’s stance, and insist the Federal Bank’s power of overseeing should be removed in order for the much needed financial overhaul to happen. Dodd believes the Fed can be blamed for the financial crisis in part for their inadequate regulation and failure to identify and react to problems.
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