Bloomberg

TIM GEITHNER, the treasury secretary (left), has made overhauling finance a priority. Instead he faces delay. America has four federal bank regulators, including the Federal Reserve. Mr Geithner wants to increase the power of the Fed to oversee not just banks and their holding companies but any firm that might imperil the financial system. At the same time the Fed and the three other regulators would cede their consumer-protection duties to a new body.

Many in Congress are sceptical of making the Fed more powerful. They say it did too little to monitor banks' behaviour in the lead-up to the crisis. Chris Dodd, chairman of the Senate Banking Committee, has now proposed merging the bank regulators into a single agency, stripping the Fed of its supervisory duties. This makes sense: the current set-up encourages banks to shop around for supervisors. But the proposal will be fought by regulators and by small banks which fear that big banks would capture the new agency.

Mr Geithner has also proposed compelling banks to offer “plain vanilla” products, such as no-frills credit cards. In the face of stiff opposition by bankers, Barney Frank, Mr Dodd's counterpart in the House of Representatives, says he will not pursue this idea.

While Congress fiddles, the Fed is expanding its reach. It plans to supervise bankers' pay practices more closely, as well as the “non-bank” lending subsidiaries of bank-holding companies. It may even use existing powers to limit banks' positions in complex derivatives, says Karen Petrou, a consultant.