Originally Posted by Villages Kahuna

I'm pretty sure that the Fed passes along the costs of both the operation of the Federal reserve Banks as well as regulation in the form of fees and the insurance premium they charge member banks for their deposit guarantees. I think recently there was some discussion of a fairly dramatic increase in those premiums in particular, but I can't recall how that ever turned out.

But you did raise an interesting question regarding OVERSIGHT.

I commented that I had little confidence that the bank regulators were smart and experienced enough to assess the actual risks being assumed by banks as the result of their participation or sponsorship of many of the more complicated financial derivative products. Those are people who make a living "regulating" and are trying pretty hard to understand the complexities they're dealing with.

But Congress has the responsibility of oversight of the Fed and/or the other federal agencies that regulate financial institutions. If I had little confidence that the bank examiners could figure out the risks associated with derivatives, I have NO confidence that the members of Congress on the finance committees have ANY ability to understand what they're dealing with.

What's scary is that it will be members of Congress who will take the carefully-crafted regulation proposal developed by the President and the Fed and change all the wording based on their political leanings and probably faulty understanding of the business and products they're supposed to regulate. It will be regualtions produced by a no-nothing Congress that we will expect to protect us from a recurrence of the financial meltdown on 2008. Scary.