So argues Roger Altman, the Clinton administration’s deputy secretary of the treasury, in a New York Times’ editorial. Altman makes two main points:  the fed’s power– to set interest rates and control inflation– is undermined by the alphabet soup of federal financial regulators. And the federal reserve is also weakened by the fact that entire financial institutions– investment banks, hedge funds, and mortgage companies– are now basically unregulated. Altman wants the Fed to supervise both the unregulated investment banks (like Bear Stearns), while also patrolling the work of federal agencies like the Securities and Exchange Commission and Federal Deposit Insurance Corporation.

This all seems to make sense…but is reorganizing the bureaucracy getting to the root problems of poor federal oversight? Altman’s wonky piece mentions not one single person. But it seems that executive branch leaders can choose to  either get worked up about subprime loans before the foreclosure crisis or wait until the crisis hits. If the Fed stays as reactionnary as it was during the Bush administration, Altman’s prescriptions will amount to chair rearranging.-MB

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