The nation's biggest bank lobbying groups are calling on senators to support the Federal Reserve's power to supervise small and large banks.
In a letter to Senate Banking Committee members, six large trade associations say the central bank's power should not be limited only to overseeing monetary policy, as some critics of the Fed have suggested.
The six associations include: the American Bankers Association (ABA), Independent Community Bankers of America (ICBA), Financial Services Roundtable, Financial Services Forum, Consumer Bankers Association and Securities Industry and Financial Markets Association (SIFMA).
Lawmakers have lashed out repeatedly at the Federal Reserve over the last year and have criticized the bank's regulatory lapses in the run-up to the financial crisis and also the numerous government efforts to bail out the industry. Federal Reserve Chairman Ben Bernanke earlier this year received the fewest confirmation votes of any Fed chairman amid a backlash at government rescue packages for Wall Street and banks across the country.
The House passed broad financial overhaul legislation in December that included new powers for the government to audit the Fed's decisions on monetary policy, a move that the central bank has fought vociferously. The central bank has argued that additional audits of interest rate decisions would compromise the independence of the Fed.
The Fed has strongly pushed back at possible efforts to limit its supervisory and regulatory powers, but the financial industry has been relatively quiet in public about its preference for keeping strong supervisory powers at the central bank.
The trade associations said they support the Fed continuing to have power to supervise state chartered banks that are members of the Federal Reserve System.
"It would be a mistake to limit the Federal Reserve to supervision of only large, complex institutions headquartered in major financial centers," the associations wrote. "The Federal Reserve needs a broader regulatory focus to ensure that for both its central bank and regulatory functions it has a clear view of banks of all sizes, from all regions, and from differing types of communities."