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The banks have accounts with the Fed, much the same way that you have an account in a commercial bank.

Regulators all meet with Goldman Sachs executives and employees day after day after day. They don't see the people who get tricked, the people who get cheated, the people who get fooled by the products that Goldman turns out.

The Federal Reserve, the Treasury, all the regulator agencies - if there's a problem of the financial mechanism in society, the only one to fix it is government. They've got a legitimate role.

Federal Reserve officials have stressed the importance of the Fed's independence. But such independence does not mean that it is immune from Congressional oversight.

Our current way of regulating the financial system is dysfunctional. Oversight is dispersed among numerous confusing bodies that at times have seemed to be racing each other to the bottom. Setting up One Big Regulator would end that problem.

I felt that the Fed had always been the agency that picked up the pieces when there was a financial crisis, and it was invented to do exactly that.

Regulators are a backstop: they don't own banks. The governance at the top of our leading banks has been shown to be lamentably weak. No one at the top of Barclays will take responsibility for systemic abuse.

The Federal Reserve ranks among the most transparent central banks. We publish a summary of our balance sheet every week. Our financial statements are audited annually by an outside auditor and made public. Every security we hold is listed on the website of the Federal Reserve Bank of New York.

You know, I think many people have the mistaken impression that Congress regulates Wall Street. In truth that's not the case. The real truth is that Wall Street regulates the Congress.

You read constantly that banks are lobbying regulators and elected officials as if this is inappropriate. We don't look at it that way.