An agreement to create a new risk management council--to be led by the Treasury (Treasury news), not the Federal Reserve Board (Federal Reserve Board news)--seems to be imminent. This builds on an idea the White House floated last summer. The devil of course will be in the details. But you would have to wonder exactly how this will work with the Treasury in charge.

A lot of people continue to think that the Fed is best positioned to play this role, with its roots and expertise running quite deep in the financial markets. A House bill still has the Fed playing the key risk management role. As proposed, the Treasury would chair the council, while the Fed would own the vice chair spot. So all the metrics and arcane subject matter expertise needed to gauge risk would likely come from the Fed.

Still, the optics of all this is rife for interpretation. The Fed seems to have been weakened a bit by the chairman's bruising confirmation hearings. The New York Times reports that the main goal of the Fed has been to preserve it status as the top regulator of big banks. So the time was ripe for those who wanted to elevate the role of Treasury. In the end, they'll have to work together, all politics aside.  

For more:
- here's the New York Times article

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