The U.S. House Committee on Agriculture indicated at a hearing last week that it might not be willing to give the Federal Reserve sweeping powers to regulate commodity trading firms that are currently under the oversight of the Commodities Futures Trading Commission.

The Obama Administration has proposed a regulatory reform plan that gives the Fed powers to regulate all sorts of financial institutions, including subsidiaries and affiliates of financial holding companies that are currently registered with the CFTC.

These reform proposals are part of a broader effort to reform the U.S. financial system to avoid the problems that caused last year’s financial crash and forced the U.S. government to spend billions of taxpayer dollars to bail out banks and other large companies.

A key part of the Obama reform plan is to create a systemic financial risk regulator – the language of the bill calls for a council of regulators - to oversee financial firms considered “too big to fail.”

The Fed would be part of that regulatory council, but with broader powers than other regulators, including the ability to impose standards on a larger swath of trading firms despite the objections or expertise of council member agencies such as CFTC under which the targeted financial institutions operate.

In testimony before the House Committee last week, CFTC Chairman Gary Gensler was weary of that plan and warned of unintended consequences.

Gensler said the proposal to broaden the powers of the Fed to allow the central bank to impose stringent rules on futures commission merchants and commodity pool operators or investors to solicit funds from people to invest in the commodity futures markets could be a problem.

The committee appears to agree. Chairman Rep. Collin C. Peterson, D-Minn., issued a statement after the hearing saying, “I am skeptical of the idea of a systemic risk regulator in general and very much opposed to having the Fed play a leading role as this draft proposes.”

He added, “No one regulator should be given so much independent power over our economy, certainly not one whose governance has been influenced more by the wishes of major banks than the American people.”

Ranking member Rep. Frank Lucas, R-Okla., expressed similar views, saying, “I was particularly pleased to hear CFTC Chairman Gensler say that the futures market does not need multiple regulators.”

He added, “As this bill reads now, the people who have the regulatory responsibility over the futures market on a daily basis can be overruled by some super regulator, which has no expertise in these nuanced markets. This is one of the many shortcomings with this bill that needs more work.”