Without such involvement, the Federal Reserve would be much less able to maintain both its practical knowledge of banking and other financial markets, and the influence and authority necessary for macroeconomic policy and crisis management. Ivory towers are great for universities, but they are not desirable for central banks.
While our supervisory responsibilities make us a better macroeconomic policymaker, I believe that our macroeconomic policy responsibilities make us a better bank supervisor. In the course of designing and implementing our supervisory policies, we must weigh safety and soundness concerns against the potentially adverse effects on the economy of excessively rigid regulations.