Fed Up

| Mon Jan. 26, 2009 1:55 AM EST

FED UP....Barney Frank wants to give the Fed more regulatory power:

Congress is moving to create strong new oversight of the financial sector that would likely give the Federal Reserve authority to examine the workings of a wide range of companies in an attempt to address one of the key failures that led to the financial crisis.

But the initiative, which could be finalized in the House by spring, is raising concerns about whether it would muddy the Fed's traditional mission and concentrate too much power in a single federal body.

This is just an initial gut reaction on my part, but I don't really care much for this idea. Rationalizing our hodgepodge of regulatory agenices is a good idea, but the Fed chairman already has enormous power over the economy — too much power, perhaps — and placing both monetary authority and a vastly increased centralized regulatory authority under a single person strikes me as a pretty severe case of putting all our eggs in one basket. I'd prefer instead to see the Fed streamlined a bit, with an entirely new agency taking over the super-regulatory role if that's the road we go down.

I'm open to arguments on this, of course. But the instinct to create a single, vast, centralized oversight agency whenever something goes wrong — like the Office of the Director of National Intelligence created after 9/11 — deserves to be resisted. It's the kind of thing that makes people think they're solving a problem when they're really just redrawing the org chart. It also makes dissent harder, and that's no good thing. We could probably use more of that, not less.