Senate hearing has Republican and Democrat critics
At a Senate hearing, the US Treasury chief Tim Geithner had to defend his proposal to grant new systemic risk regulation powers to the Federal Reserve, the FT reports.
"You cannot convene a committee to put out a fire," Mr Geithner said, insisting the Fed was the best body to guard against risks in a large institution that could drag down the entire financial system.
The Fed will be helped by a council of regulators but Geithner and Lawrence Summers, chief economic adviser to President Barack Obama, are determined that the real power resides with the central bank.
Richard Shelby, senior Republican on the committee, said the proposals presented a "grossly inflated view of the Fed's expertise". David Vitter, a Republican from Louisiana, said new accountability placed on the Fed was "really crossing a line" in compromising the bank's independence.
Some Democrats have also argued that the Fed should concentrate exclusively on monetary policy.
Geithner proposes to give the Fed's consumer protection role to a new Consumer Financial Protection Agency. Chris Dodd, Democratic chairman of the committee, said the Fed had "dropped the ball entirely" on consumer protection.
State regulators want a role
Dow Jones reported that State insurance regulators want to keep a role in regulating insurers.
"We want to move towards more consistency without losing our strengths," Terri Vaughan, chief executive of the National Association of Insurance Commissioners, said.