“The government agency that watches over Wall Street came in for repeated rounds of criticism on Friday at a Senate hearing into its regulatory track record.

“Many of the senators at the hearing were expected to be critical of the Federal Reserve Bank of New York, after recent reports cast doubt on the agency’s ability to rein in large banks.

“William C. Dudley, the president of the New York Fed, defended the agency, but Senator Elizabeth Warren, Democrat of Massachusetts, at one point told him, “You need to fix it, Mr. Dudley, or we need to get someone who will.”

“The president of the New York Fed is not chosen by Congress. And much of the stern questioning could be seen as the sort of grandstanding that plays well with those who want to limit Wall Street’s power or were harmed in the financial crisis of 2008. Even so, it will be hard for the Fed to ignore the anger directed at Mr. Dudley. The New York Fed is the public’s first line of defense against Wall Street’s excesses and abuses, and the discontent in Congress could build if more evidence emerges that suggests the New York Fed is not tough enough with the large banks it oversees.”

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“Perhaps as a defensive move before the hearings, the Federal Reserve Board, the Fed’s central body, announced on Thursday that it was going to review certain aspects of how it regulates banks. The Fed asked its inspector general to look into whether bank supervision information was properly shared throughout the agency. And it called on the inspector general to examine whether an arrangement existed to make sure that the opinions of all its examiners were heard. The moves come after the Fed was criticized for uncritical, consensus thinking.

“The review is a transparently political ploy that will probably backfire on the Fed,” said Dennis Kelleher, president of Better Markets, a group that lobbies for tougher financial regulation.”

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Read the full New York Times Article by Peter Eavis here.