Reform bill would cut power of regional Fed banks

The financial reform bill introduced this week by Democratic Sen. Christopher Dodd of Connecticut would shift power from regional banks of the Federal Reserve System to the New York bank and teh Fed's Washington headquarters, ending "a unique structure set up a century ago to distribute authority and ensure the central bank was not dominated by the nation's political and financial capitals," Neil Irwin and David Cho report for The Washington Post.

"The oversight of almost 6,000 small and midsize banks, one of the major tasks carried out at the 12 regional Fed banks, would be taken over by other federal agencies," the Post notes. "Regional Fed banks that do not have many large banks in their districts could see their staff and authority shrink, reducing these banks to something akin to regional economic think tanks rather than powerful overseers of the financial system." (Read more)