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A top economic adviser to President Obama warned on Friday that the urgency for changing the rules of the road for financial firms may be waning and urged Congress to act while the general public is focused on banking issues.
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CNBC.com |
"Too big to fail is too bad of an idea" to let momentum for stronger regulation fade, said Austan Goolsbee, a member of the White House Council of Economic Advisers, in remarks at the Bloomberg Washington Summit.
Goolsbee questioned the value of a proposal from Senate Banking Committee Chairman Chris Dodd to create a single bank regulator and said it may take too long to implement.
Dodd wants to create a single bank regulatory agency and strip the Federal Reserve of its bank supervisory powers, similar to the Financial Services Authority in the United Kingdom.
"I would say first as a general statement they had a lot of problems in the U.K. as well, so I don't think the division of what box goes where is the central" issue in creating a strong regulatory framework, Goolsbee said.
"I am a little worried that to create that new agency would take a long time," Goolsbee added.
Meanwhile, a top Treasury official said the Federal Reserve is best equipped to supervise the largest, most complex firms.
"No regulator had a perfect record leading up to the crisis," Deputy Secretary Neal Wolin said in remarks prepared for delivery to the American Bar Association's banking law committee.
"But in our view, the Federal Reserve is the agency best equipped for the task of supervising the largest, most complex firms."
Also, a long-standing congressional critic of the Fed told CNBC Friday that his proposal to audit the central bank's monetary policy, an initiative strenuously opposed by the Fed, has been defanged in financial reform legislation in the House of Representatives.
"The plan now is to get an audit put into the bill, but it will be a pseudo audit, it won't amount to much," said Representative Ron Paul in a live interview.
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