Bernanke Will Testify Against Dodd's Financial Regulation Bill

Today, Bernanke will argue against Senator Dodd's proposed financial regulation bill. The square off will consist of Bernanke's testimony in front of the House Financial Services Committee.

Senator Dodd's bill will increase unneeded bureaucracy. The Federal Reserve was given the independent right to supervise banks and implement monetary policy. Supervision is one factor that adds to the Fed's overall grasp of the economy. Separating this responsibility will interrupt the Fed's process and create more confusion. Why spend money on creating a branch complete with tasks that are already delegated? This is yet another nonsensical DC policy that is purely marked with good intentions but lacks feasibility.

The biggest concern is this "emergency" fund. Prepaid bailouts does not add to the mission of getting rid of "too big to fail" and protecting the American people from financial mishaps. If anything, better supervision should decrease the need for a bailout.

Yes, the Fed messed up with supervision, but we must understand the complexities of securitization; it's difficult to pinpoint the source of the problem. With so much insurance on debt and obligations being packaged, the market was full with no real value to these products -- it was one big mess. Supervision was difficult, but a bail out should always be a last resort. I support the creation of bad banks on Wall Street, and not Main Street. The Fed made the mistake of becoming a bad bank, and Dodd's bill will call for bureaucrats to enter negotiations armed with cash.

The growth of government seems to be the inconvenient solution. The biggest shareholder in the financial system is the government, and new regulations are merely steps to protect future investments, which means increasing government. Bailouts come with moral hazards of huge bonuses and other shady practices, and government is just learning this.

Senator Dodd doesn't understand the whole scheme. The treasury bails out troubled banks, while the Fed funds these bail outs by purchasing attractive treasury bills. The return on interest and added bank fees for insurance serves as revenue for the Fed, in which about 80% is given to the Treasury. So, I beg to question the motives of these politicians. I support Bernanke's fight to keep the Fed independent.