QuoteA massive shake-up by the Fed following the financial crisis in 2008 has resulted in the Federal Reserve Bank of New York losing its power as the leading banking regulator on Wall Street.

The Fed's center of regulatory authority is now quietly controlled by an obscure committee headed by Fed governor Daniel Tarullo, which keeps a close watch on such banking giants as Goldman Sachs Group and Citigroup Inc., The Wall Street Journal reported.

The behind-the-scenes reorganization was initially unveiled in a paper known as the Triangle Document, which was given little attention when it was drawn up in 2010.


Under the new system, the central bank in Washington is now at the hub of all banking supervision, while exerting control over the Fed's 12 reserve banks, including the New York Fed.

"This reserve bank doesn't breathe any more without asking Washington if it can inhale or exhale," a prominent source in the banking community told the Journal about the New York Fed.

The power shift was instigated after the financial mayhem in 2008, and has gained traction over the past five years, the Journal said, while noting that the changes have increased oversight on the biggest banks on Wall Street.

Since the changes were implemented, the Fed in Washington has challenged decisions by examiners for the New York Fed, who have also been shut out of policy meetings and been openly criticized by Tarullo for not preventing a slew of banking problems, according to Fed officials.


"It was obvious that a lot in the U.S. regulatory system had not worked particularly well before the crisis," Tarullo said. "It was equally obvious that there was going to need to be a rethink and reorganization."

Although the Fed has gradually been taking away regulatory power from the New York Fed, the central bank has not talked about it until now, according to the Journal

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Wow! another power grab by Washington?
By consolidating everything in DC isn't this just asking for political manipulation of American banks? The article is about the New York fed but what of the others? Are they also to be run from Washington? Isn't this the first step to the nationalization of private banks reliant on the fed monetary policy?
I just read the other day of a tobacco business in north Carolina  that bank of America shut his accounts after 15 years because they chose not to do business with him anymore. The same story has been repeated by small fire arms manufactures. Are we seeing a new way of bringing about Obama's "Change"!

Quantative Easing is the monetization of our debt.  The Fed has been "purchasing" T-Bills at a rate of more than 1 1/2 Billion/Month, throughout the Obama Administration (over a Trillion $$$ per year in Goverment IOU's in exchange for new printed money)   As long as the FED keeps purchasing the goverment's debt, they keep inflating the balloon.  Wall Street is just as happy as I'm sure they were on the Monday before Black Tuesday, when the bottom fell out!

Hyper Inflation is no doubt goin g to kick in right about the next poor sob takes office!  That's the plan!

I wonder if he/she will jsut blame Obama and the Democrats?

Shades of the Weimar Republic