November 12, 2009

U.S. Sen. Chris Dodd's proposal to gut the Federal Reserve probably won't ever make it into law, but regulatory reform likely will be enacted next year in some form, local banking experts say.The Senate Banking Committee chairman's proposal, unveiled earlier this week, is perhaps one of the most far-reaching proposals to address some of the ills uncovered by last fall's financial meltdown that threatened banks' balance sheets and shattered some Wall Street giants.

Dodd's proposal, which could advance to the Senate floor by December, would take away most of the powers of the Federal Reserve and the Federal Deposit Insurance Corp. to regulate banks. In their place, the bill would place bank regulation into the hands of a new agency, while also creating a Consumer Financial Protection Agency designed to safeguard consumers' interests.