Dodd defends cuts to Fed supervision

Senate Banking Committee Chairman Chris Dodd (D-Conn.) is questioning the Federal Reserve's claim that broad bank supervision powers help in decisions on monetary policy.

Dodd called Fed Chairman Ben Bernanke's claim, "a compelling argument, if it were true."

Dodd's financial overhaul plan, scheduled for a markup next week, would limit the Fed's supervisory powers to large financial firms with at least $50 billion in assets. That threshold would leave out thousands of banks across the country from the Fed's supervision.

Bank lobbying associations have argued that the Fed should have supervisory power over large and small firms across the country.