Senate: Democrats would strip Fed of supervisory powers, create three agencies WASHINGTON – Senate Democrats on Tuesday proposed stripping the Federal Reserve of its supervisory powers and creating instead three new federal agencies to police banks, protect consumers and dismantle failing institutions.
“We saw over the last number of years when (the Fed) took on consumer protection responsibilities and the regulation of bank holding companies, it was an abysmal failure,” said Dodd, a Connecticut Democrat.
Dodd’s proposal prompted cheers from consumer advocates and other Democrats, including Sen. Mark Warner, D-Va., an influential moderate who said swift action was necessary to prevent future government bailouts of big banks.