Overseeing financial institutions helps the Federal Reserve set monetary policy and will help it withdraw stimulus support for the economy, Fed Chairman Ben Bernanke says. "The Federal Reserve's participation in the oversight of the banking system significantly improves its ability to carry out its central-banking functions," according to a report written by the Fed and submitted by Mr. Bernanke to leading lawmakers on the Senate banking committee. Paul Volcker, a former chairman of the Fed, made a separate plea to keep the central bank's supervisory authority. Mr. Volcker said in a speech that proposals to transfer bank supervision away from the Fed were disturbing.

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