Senators hit at core of Obama financial reforms

WASHINGTON (Reuters) - Senior U.S. lawmakers launched an assault on Thursday on the centerpiece of the Obama administration's financial reform plan -- giving the Federal Reserve new power to police broad risks in the economy.

"I do not believe we can reasonably expect the Fed or any other agency to effectively play so many roles," said Sen. Richard Shelby, the top Republican on the Senate Banking Committee.

A day after President Barack Obama unveiled the plan, Treasury Secretary Timothy Geithner was on the defensive as he testified before the committee, fielding questions about giving the Fed authority to be the "systemic risk" regulator.
'Regulator' is not a popular word with free-market economists, but something has to be done. The problem has been that the bankers and traders are smarter than the SEC.

You can't monitor an exotic derivative for risk if you don't understand the complexity of it. -- The best and the brightest go where the money is. And bad debt can be made to look good on paper.