“We should be able to do business with the Federal Reserve – as long as all these new powers do not go to its head.”

The response of a senior banker summed up Wall Street's reaction to the Obama administration's proposals to overhaul financial regulation: relief mixed with apprehension over the planned powers to be assumed by the central bank. The Fed's proposed role as a “systemic regulator” did not appear to surprise traditional commercial banks and investment banks, most of which are already being overseen by the monetary authorities.

“If the industry had a choice of an overall regulator, it would have chosen the Fed,” said one Wall Street executive. “They have a better idea of what is going on than most regulators. They are better staffed and more respected by companies.”