Fed Fell Down On the Regulatory Job - Why, Then, Make the Fed The Top Regulator?

The Washington Post [1] makes clear that the secretive, undemocratic and largely unaccountable Federal Reserve worked to hide information about AIG's ripoff schemes (though I don't think this in any way contradicts what we now know Geithner, et. al knew - or should have known). This comes on top of the broader news about the Fed failing to seriously regulate the financial industry over the last few years, thus helping create the overall financial crisis.

You might think that in light of this news, Congress would work to lessen the centrality of the Fed in regulating the economy. But no, in fact, Congress is thinking about [2] making the Fed more central in financial regulation:

WASHINGTON -- House Financial Services Committee Chairman Barney Frank said the first priority in overhauling financial regulation is to set up an entity to oversee systemic risks of the kind that walloped Wall Street last year.

Mr. Frank, a Massachusetts Democrat, said this oversight could be given to the Federal Reserve and a general plan may be in place by April.

Seems to me that if a secretive regulatory agency falls down on the job and then proceeds to waste trillions of dollars on no-strings-attached bailouts, Congress might want to look to better, more publicly accountable agencies to become the chief regulator.