The Blueprint Lives

The Washington Post reports that legislation brewing in the House Financial Services Committee would put the U.S. Federal Reserve, “or less likely another government agency, in charge of protecting the stability of the entire [financial] system.”

The article also reports that President Obama’s administration has clearly directed Congress to overhaul the current system of U.S. financial oversight, a foundational element of former U.S. Treasury Secretary Henry Paulson Jr.’s controversial blueprint for regulatory reform.

The primary source for the article looks to be House Financial Services Committee Chairman Barney Frank (D-Mass.). “We need to give some regulator the power to restrain risk-taking that is excessive,” Frank is quoted as saying. This empowerment likely would include the ability “to gather information about the inner workings of banks, investment firms, insurance companies, hedge funds and any other entity big enough or so intertwined with other companies that it creates the risk of a systemic collapse.”

The Post’s online edition also offers an interesting roundup of reader responses to the idea of a more empowered Fed. This roundup would be much more helpful (as would many publication’s recent forays into “citizen journalism”) if an staff subject matter expert identified erroneous claims when they cropped up in reader comments.