Charles Evans, the president of the Federal Reserve Bank of Chicago, defended the central bank's oversight of state member banks, saying it provides a valuable insight into the economy.

"Our supervisory role with community and regional banks provides us with grassroots information that ensures a balanced regulatory perspective and provides regional insights that are important to our monetary policy role," Evans wrote Tuesday in a letter to 10 senators from five states within his district.

The Senate Banking Committee is weighing a reform bill that could strip the Fed of its bank supervisory responsibilities. Although Fed officials have defended its oversight of bank holding companies, they have said relatively little about supervision of state member banks.

Evans also included a plug for the Fed to become the systemic risk regulator.

"Some regulatory entity must be responsible for gathering the necessary data and evaluating the financial strength of these institutions in order to identify potential problems for financial markets," Evans wrote.

In describing the Fed, he said, "No other agency has this range of perspective and insight."

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.