With the finance industry in the U. S now reaching a stability phase, the House Financial Services Committee has recently proposed to cut Fed's role from supervising smaller banks.

However, the Chairman of the Federal Reserve Ben Bernanke is planning to defend Fed's role in the supervision in the upcoming hearing before the committee.

In fact, the proposal was to pull the Fed's role out of the picture and hand over the responsibility the FDIC and the OCC. It is estimated that if the measure comes into action, Fed will not be able to supervise almost 7,000 relatively smaller banking entities. Former Fed Chairman Paul Volcker will also appear along with Ben who will take up the case to the committee.

Analysts believe that if the proposed move is accepted then it will make the roots of Fed weaker and will eventually result in losing out on a resource of information. The recently unveiled litigation by the Senator Christopher Dodd offers much more power to the Fed as compared to his earlier proposals.

Dodd's latest proposal offers the Central Bank to take charge of only the important firms in the U. S. financial system.