Writing in today's Wall Street Journal, the American Enterprise Institute's Peter Wallison says, "piling yet more responsibilities on the Fed raises the question of whether we are serious about discovering incipient systemic risk. If we are, then an agency outside of the Fed should be tasked with that responsibility....If we are going to have a systemic-risk monitor, it should be an independent council of regulators."
The thing about the Constitution is that it doesn't make our government agencies "independent," it makes them dependent on the consent of the governed, that is, accountable somehow to the voters. If it's independence that one is looking for, it's hard to imagine an agency more independent than the Federal Reserve. It's not funded by Congress, and its governors are not elected by the public. Rather, they are appointed for 14-year terms, during which they "may not be removed from office for their policy views." It makes sense for Mr. Wallison to be skeptical of saddling the Fed with more responsibility, but he's a bit vague about this independent council of regulators or "agency outside of the Fed" that he proposes instead. An "independent council of regulators" might also be called an "army of unelected and unaccountable but immensely powerful government bureaucrats." A lot of free-market types are skeptical of plans to set up this sort of panel to govern health care decisions. Why would they want such a panel to assess risk in the economic system?