[JURIST] US financial regulators and scholars advised [hearing materials; recorded video] the Senate Banking Committee [official website] on Thursday that "safety and soundness" can be restored to the financial system through increased regulatory oversight, but did not agree on the form that oversight should take. In his opening statement [text], committee Chair Christopher Dodd (D-CT) [official website] expressed doubt about the Obama administration's plan to control systemic risk to the economy by charging a Federal Reserve [official website] advisory panel with overseeing certain financial companies:

The Fed hasn't done a perfect job, to put it mildly, with the responsibilities it already has. This new authority could compromise the independence the Fed needs to carry out effective monetary policy. Additionally, systemic risk regulation involves too broad a range of issues for any one regulator to oversee.

[E]ffective regulation should await evidence and conclusions about the causes of the recent crisis...[R]eform should start by increasing a banker's responsibility for losses. The administration's proposal does the opposite by making the Federal Reserve responsible for systemic risk.

[M]ajor institutions engage in enormous, virtually unregulated trading in synthetic versions of other, often regulated financial products. We can do much to reduce systemic risk if we close these gaps and ensure that similar products are regulated similarly.