The Federal Reserve has long held its independence as key to its ability to focus on its mandate and guide the economy. Political fallout from the Fed's role in and response to the finance crisis will make it difficult for the central bank to do its job, former Fed officials said. U.S. Sen. Christopher Dodd said his proposal to overhaul financial regulation would help the Fed focus on interest rate and monetary-policy decisions by removing its responsibility to oversee banks. The Obama administration disagrees. The contrasting views could hinder approval of legislation to revamp financial regulation.

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