Obama to Propose Federal Reserve as Super-Regulator in Reforms

The administration of President Obama is expected to recommend sweeping reforms of the financial services and banking industries this week as promised. But according to the Wall Street Journal, the Federal Reserve has been marked as an important part of the new regulatory environment being proposed.

Officials are saying that the recommendations are in a “white paper” that will be released Wednesday. In it, they propose to increase the power of the Fed to oversee the largest financial institutions.

Part of the plan also involves giving the government power to break up large institutions that have failed, like the FDIC’s power over banks, and creating a new regulator that would specifically monitor consumer credit products. The plan would call for an end to the Office of Thrift Supervision.

While the plan does not go as far as many expected, it is thought that it will meet will stiff resistance, according to The Journal. At the heart of the opposition will be increased power for the Fed, an institution already under scrutiny from many. (Editor’s Note: insideARM will be detailing some of that scrutiny in a feature slated to run Wednesday)

Details of the plan are guarded, with “those close to the situation” being quoted by The Journal. Also included in the plan is a council that will oversee “financial institutions, products, or practices that could pose a systemic risk to the economy.” But this will also be the purview of a newly empowered Fed, and it is not clear whether the council or the Fed will have final say on tactical moves.