US Fed chief concerned by regulatory proposals

November 28, 2009
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, WASHINGTON, Nov 28 – The head of the US central bank said on Saturday he was "concerned" by some congressional proposals aimed at regulating the US financial system that infringe upon the powers of the Federal Reserve.

"I am concerned, however, that a number of the legislative proposals being circulated would significantly reduce the capacity of the Federal Reserve to perform its core functions," Federal Reserve Chairman Ben Bernanke wrote in an op-ed piece in The Washington Post.

He said some proposals considered by the US Senate as part of attempts to strengthen US government regulation of the financial sector would strip the Fed of all its bank regulatory powers.

He also noted that a House committee had recently voted to repeal a 1978 provision that was intended to protect monetary policy from short-term political influence.

"These measures are very much out of step with the global consensus on the appropriate role of central banks, and they would seriously impair the prospects for economic and financial stability in the United States," Bernanke wrote.

"The Fed played a major part in arresting the crisis, and we should be seeking to preserve, not degrade, the institution\’s ability to foster financial stability and to promote economic recovery without inflation," he stressed.

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