No regulator had a perfect record leading up to the crisis, Deputy Secretary Neal Wolin said in prepared remarks to the American Bar Association's banking law committee. But in our view, the Federal Reserve is the agency best equipped for the task of supervising the largest, most complex firms.
The comments came three days after Senator Christopher Dodd, chairman of the Senate Banking Committee, proposed consolidating bank supervisory powers in a single agency, stripping the Fed of its role as a direct bank supervisor.
Wolin did not mention Dodd by name in his comments, but said the Fed's supervisory role gave it a deep understanding of and timely access to information about the banking sector, payment systems and capital markets.
Stripped of its supervisory role, the Fed would not have timely and complete information in a crisis, he said.
The Fed, the U.S. central bank, has drawn sharp criticism from some lawmakers for its handling of the financial crisis, particularly its controversial decisions to extend emergency loans to firms such as AIG, which it did not directly supervise.
(Reporting by Emily Kaiser; Editing by Neil Stempleman)