Ben the bank czar, Senate pushes plan to widen Bernanke's powers

By KAJA WHITEHOUSE

A reform proposal is gaining traction in Washington to crown Federal Reserve Chairman Ben Bernanke as the new banking king, with broad authority over the nation's largest banks, according to people familiar with the matter.

These people tell The Post that the proposal, which is gaining support in the Senate Banking Committee, would give the Fed chief supervisory power over the 25 largest banks, including Citigroup and Bank of America.

In addition, the proposal would tap the Fed to be the lead protector of consumers when it comes to products such as credit cards and mortgages sold by these banks.

BERNANKE
BERNANKE

"There's a lot of enthusiasm for getting something done," said one Washington insider briefed on the discussions. And given Bernanke's popularity with Wall Street, this proposal is being pushed to the top of the pile, this person said.

Sources aware of the discussions stress that things remain very fluid in the Senate, but the hope is to try to hammer out a plan quickly so that the committee can introduce legislation as soon as this week.

If Bernanke gets the additional responsibilities, it would mark a dramatic change in the Fed chief's influence in less than a month.

As Congress and the White House have sought to put forth a series of proposals to strengthen regulations concerning the financial industry, the Fed has come very close to losing much of its authority amid criticism it failed to quickly spot problems that have contributed to the financial crisis.

Bernanke himself also has faced criticism from members of Congress who are frustrated by the pace of the recovery, a battered US dollar and a ballooning deficit.

The Senate Banking Committee is struggling to get its reform plans off the ground, with high-ranking members admitting they've returned to the drawing board in recent days to come up with a plan that would be palatable to Wall Street.

Sen. Chris Dodd (D.-Conn.), chairman of the committee, turned heads Friday when he said he's reconsidering earlier plans to strip the Fed of its power over banks. He also is backing away from an earlier plan to create an agency to oversee credit cards, mortgages and loans.

But as of yesterday, sources said things had changed yet again. Now the plan to enhance the Fed's powers is surfacing as the most likely plan. kaja.whitehouse@nypost.com

http://www.nypost.com/p/news/business/ben_the_bank_czar_ga7plip7RBK...

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