Geithner Bullies Financial Regulators to Accept Fed as Top Dog

The Wall Street Journal reports that Timothy Geithner tongue-lashed Federal financial services regulators over their bucking the Obama Administration initiative for the Fed to become The One Regulator to Rule Them All. This comes on the heels of Congressional testimony which showed rather clearly that the key actors were not singing from the same hymnal.

This display of pique seems badly misdirected. I doubt that the show of disarray will make much difference in the outcome. Congress is engaged in a turf war against the Fed, justifiably unhappy with the Fed acting, as Willem Buiter put it, as quasi fiscal agent, effectively circumventing Congress' control over budgetary purse-strings via stretching the TARP through various off-balance-sheet vehicles (from the Treasury standpoint). If Lyndon Johnson were still Senate majority leader, you'd have had a Constitutional crisis before things would have gotten this far. Congress was far more zealous about protecting its sphere of influence, but successive Presidents have managed to cut it down to size.