Perhaps the right question isn't one of "could", but "would".

Can the Fed Rein in the Big Banks? The answer is no.

while there are good ideas by the good professor, nothing will happen. wallstreet controls all phases of the elected power structure. if obama had wanted, he could have put so much pressure on bernanke, that bernanke would have been forced to step aside. he didn't want to. the fed, & former chief greenspan & his protege bernanke have no intention of submitting to any changes or anything else except to continue the rape of ordinary citizens so the wealthy can get much wealthier. according to the former chief economist for mckinsey & co., there is $32 trillion offshored by the wealthy, not including yachts, exotic cars, whole owned islands & other real estate. we aren't going to change anything, the wealthy will continue to lie about everything under the sun, & the rubes will continue to fall for it, obama or romney, it's the same thing, r is just much stupider than o.

The Fed could (but will it) rein in the TBTF banks, because anybody getting FDIC coverage has to play by the rules. That being said, market-based credit systems (aka "shadow banks") can always find new products to sell that the regulators and even the banks themselves have no real clue as to how to assess the risk contained in these products.

Perhaps the question is: even if the Fed did rein in the big banks with gradated equity requirements, would it matter?

Perry Mehrling has some very clear insights into the overall structure that has forced the Fed into this new role:: http://ineteconomics.org/blog/...considered. The Fed is doing unusual (relative to the historical record) stuff because the finance guys are doing even more unusual stuff.

Obviously, from the comments above, the Fed has a credibility issue. They can do what Sherrod Brown and David Vitter asked the Fed to consider http://thehill.com/blogs/on-th...quirements, and that would take a lot of the political pressure off of them. Or they can cause another decade of political turmoil, if not.