Fed's Crisis Role Spurs Questions of Overreach

One issue the central bank could face is manpower. It is overseen by a seven-member board of governors (of which only five slots are currently filled), and as its portfolio expands, it may need to have among its leadership experts in a wide variety of fields -- macroeconomics, banking, financial markets, consumer protection and others.

Already, Fed leaders are being forced to focus on fields far from their areas of expertise.

Consider the past few days in the life of Bernanke, who honed his chops as an academic monetary economist. All weekend, he worked to engineer an offer of Fed lending for Fannie Mae and Freddie Mac. On Monday morning, he led a hearing to approve new consumer-protection rules for mortgage lenders. That afternoon, he prepared for two days of congressional testimony about the economy, during which, on Tuesday and yesterday, he discussed topics as varied as oil speculation and credit card rules.

"They're stretched thin," said Diane Swonk, chief economist of Mesirow Financial. "They've been extremely innovative in a time of crisis, but they're talking about so many different things, the market doesn't know what to focus on anymore."

An expanded role of the Fed could even pose a threat to the political independence of the central bank. Economists view its independence from the whims of Congress and the president on interest rate policy to be crucial to the nation's long-term economic health. But in its role as a regulator of banks, and potentially other financial institutions, it operates more like a conventional government agency.

An expansion of those roles, then, could mean more congressional oversight on the institution as a whole.

"They're trying to fight for independence," Swonk said. "But the more they get in bed with other government regulators, the more they'll be under the microscope of Congress."