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Consensus in Senate builds to weaken Federal Reserve by stripping it of bank oversight

Senate bill could weaken the Fed

Consensus in Senate builds to weaken Federal Reserve by stripping it of bank oversight

WASHINGTON (AP) -- Consensus is building in the Senate for legislation that would significantly weaken the Federal Reserve by stripping its power to oversee banks and hand that job to a single federal bank regulator.

The proposal by Senate Banking Committee Chairman Christopher Dodd to merge federal prudential oversight into a single regulator differs from a plan by President Barack Obama. But it's gaining traction among Dodd's colleagues who think the Fed didn't do enough to prevent the current market crisis.

"If you look at the record here of the failure of the regulatory bodies, all roads seem to lead to the Federal Reserve," said Sen. Richard Shelby of Alabama, the top Republican on the banking panel.

The House Financial Services Committee is expected in coming weeks to consider legislation by Rep. Ron Paul, R-Texas, that would subject the Fed to increased audits by congressional watchdogs. . . .

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