Bank reform

At issue are branches of foreign banks, the vast majority of which are overseen by a partnership of both state and Federal Reserve regulators.


"A continuing role in regulating the U.S. operations of foreign banking institutions gives the Fed an important window into systemic risk worldwide," Neiman said to a gathering of international bankers in Washington.

Well, there you have it, that is why the Fed needs supervision over the foreign banking institutions. But right now the problem is . . .


Dodd would remove the Fed's examination authority over banks and place that responsibility within the new consolidated bank regulator. This would leave the Fed to concentrate solely on monetary policy.


But, Ben Bernanke argued that without supervision over central banks, he and his committee will have a hard time identifying the risks and thus they will not be able to set up an effective monetary policy that will benefit the majority.

Personally, I feel that it is not wise to deny the Fed of all supervision over central banks. At the end of the day, the central banks are so-called the pillar of the economy. They are the bellwether of the economy; any changes in the loans will have a great impinge on the society.


This includes investments, expenditures, expansion projects and further developments opportunities in the future. The banks hold the assets and the Fed needs to know how much they hold and how are they handling out the loans.

Without an overview of their operations, the Fed might end up setting policies that go against these banks. Rather than supporting the bank's policies, the Fed might end up giving these banks a hard time, which is not intended in the first place.


Hence, it is imperative to allow the Fed to retain control over the renowned central banks like those in Japan, Europe and America. Otherwise, they will not be able to churn out the apposite policy that is beneficial to all.


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