Chairman Bernanke the 'Regulator'???

So, Chairman Bernanke is in for four more years. As everyone is saying, the next four are gonna be hell. There is going to be significant pressure to keep lower interest rates to stimulate economic growth and also significant pressure to raise interest rates to soak up some of the liquidity (how much pressure may depend on unemployment). But my concern is with the Fed's new role as systemic regulator.

Before Chairman Volcker (a Democrat, just proving you don't have to be a conservative Republican to do the job well). The Fed was somewhat dysfunctional (remember stagflation?) and now seems to have become competent at doing it's primary job--adjusting the flow of money into the economy (moderating the pressure toward inflation and deflation).

However, as the Fed moves into it's new role as systemic regulator, we need to think about the future not the past. Yes, Chairman Bernanke saved the economy from collapse, but what about the NEXT job, regulating the systemically significant parts of the economy (think financial services plus insurance). Will he do what needs to be done?

I don't know. I have my doubts. For example, prior to the crash, back in 2004 he gave a speech called the Great Moderation in which he praised Fed policy as the source of decreased market volatility. We now know that the Fed fell down on the job and didn't regulate what it could have and should have regulated and that led to to some serious market volatility. Volatility that nearly sent this nation into another depression. The Fed under Chairman Bernanke was able to prevent a financial system collapse because he bailed out the banks (I personally think just about anyone would have done that--and he almost failed at that when he let Lehman Brothers go under), but will he be able to regulate? I just don't know.