Federal Reserve Best Qualified To Oversee Largest Financial Institutions; Ben Bernanke (C)

Bloomberg reports that Ben Bernanke, Chairman of the Federal Reserve, said that the Fed is best qualified to regulate and oversee the largest financial institutions in U.S. Bernanke also said that the Fed should be handed over the oversight of smaller banks as well.

In a testimony prepared to be delivered on Wednesday to the House Financial Services Committee, Bernanke said, the “Fed’s wide range of expertise makes it uniquely suited to supervise large, complex financial organizations and to address both safety and soundness risks and risks to the stability of the financial system as a whole.”

Congress, which is making efforts to reduce Fed’s supervisory role, has faced opposition from Bernanke and regional Fed Presidents. In January, Bernanke had put the Fed’s case in front of Senators by sending an eleven page paper in which he argued that the Fed should retain its supervisory role.

Senate Banking Committee, which is chaired by Christopher Dodd, has put forward legislation limiting the Fed’s supervisory authority on banks with over $50 billion in assets. The proposal is part of the overhaul of financial regulation that many in Washington are in favor of. The idea behind the overhaul of financial regulation is to avoid another financial crisis. The financial crisis that struck the U.S. saw the government bailing-out large financial institutions, including the likes of Citigroup, Inc. (NYSE: C), with taxpayers money. However, policy makers in Washington will have to be careful to not over regulate large financial institutions as it may have an adverse impact.