WASHINGTON — Federal Reserve Board Chairman Ben Bernanke on Wednesday will push to keep the central bank's authority intact, just two days after Senate Banking Committee Chairman Chris Dodd released a regulatory reform bill that would dramatically scale back its oversight.
In written testimony released ahead of a House Financial Services Committee hearing on Fed supervision this afternoon, Bernanke said data from large and small banks is vital to how the central bank conducts monetary policy.
"The Federal Reserve's participation in the oversight of banks of all sizes significantly improves its ability to carry out its central banking functions, including making monetary policy, lending through the discount window and fostering financial stability," Mr. Bernanke said in prepared testimony.
Mr. Bernanke and fellow witness Paul Volcker, a former Fed chairman, are expected to make the case against stripping the Fed of its authority over holding companies and state banks.
Under Senate Banking Committee Chairman Chris Dodd's bill unveiled Monday, the Federal Reserve System would preserve its role as a supervisory regulator over bank holding companies with $50 billion or more of assets. Currently, the Fed supervises 4,974 holding companies and 844 individual state-chartered banks, but the Dodd bill would narrow that scope to 55 holding companies.
The House regulatory reform bill, passed in December, would not take away any supervisory responsibilities from the Fed, but instead would enhance its ability to oversee large, complex firms. Bernanke is expected to continue to make the case for why the Fed should serve as systemic risk regulator.
"No other agency can, or is likely to be able to, replicate the breadth and depth of relevant expertise that the Federal Reserve brings to the supervision of large, complex banking organizations and the identification and analysis of systemic risks," according to Mr. Bernanke's testimony.