The financial press is talking about the broad new powers that are about to be granted to the

Federal Reserve

under President Obama's plan to overhaul regulation of the nation's financial markets.

A

draft of the plan

, published by

The Wall Street Journal

, shows that the Fed will become something of a "super regulator" with the powers to oversee all financial institutions, their foreign subsidiaries and the finance arms of non-bank firms. Giving the Fed that kind of oversight dilutes its most important mandate, which is to maximize economic growth while maintaining price stability.

That dual-purpose mandate, which requires the Fed to report to Congress, and only Congress, twice a year, without reporting to the executive branch, has maintained the integrity and independence of the Federal Reserve since its creation in 1913.

Amid all the fanfare over the Fed's expanded powers as a regulator is a single line that limits the Fed's emergency lending powers as a policymaker, under "unusual and exigent" circumstances, a provision known as 13(3).

If the 85-page White House proposal is enacted as is, the Fed would need the approval of the U.S. Treasury to take emergency steps during financial crises, effectively politicizing the Federal Reserve and making it an arm of the White House policy apparatus.

This is a dangerous and slippery slope. Under no means should the Fed

ever

have to ask the Treasury or the White House for approval to do anything. Such permission-seeking puts the Fed chairman under the thumb of the Treasury secretary and creates the type of career risk that is not supposed to affect the decision-making of a central banker.

In reality, all Fed chairmen have served at the pleasure of the president. However, if a president were to make a capricious decision about the tenure of a highly qualified Fed chief, based on his willingness to go along with the White House, financial markets would be roiled, policies could be controlled to manipulate the economy for political advantage and the independence of the central bank put in serious jeopardy.

In the absence of a gold standard, which I in no way advocate, a strong, independent central bank promotes price stability and maximum sustainable growth. These are laudable goals and have served us quite well over the years.

The new proposals are something of a Trojan horse. While seeming to give the Fed even more power than it already has, it also allows Washington's political camels to get their noses under the tent.

We simply can't afford to politicize the Fed at a time when its independence is most needed.

From a more Machiavellian perspective, should we ask if this is the way President Obama is preparing to oust Chairman Ben Bernanke, who has been the only wise and responsible actor on the financial stage? His direction of the historic and unprecedented bailout of such major banks as

Bank of America

(BAC) - Get Report

,

Citigroup

(C) - Get Report

,

JPMorgan Chase

(JPM) - Get Report

and

Wells Fargo

(WFC) - Get Report

, along with other companies, has been nothing short of masterful. He has "out-maestroed "The Maestro," his predecessor Alan Greenspan.

There is plenty of speculation that White House economic czar Larry Summers not only coveted getting his old job as Treasury secretary back in the Obama administration, which ultimately went to the erratic and sometimes mercurial Tim Geithner, but that he may also be in line to replace Bernanke next year when he is due for re-appointment.

If that were to happen, although I believe Summers to be quite capable, it would raise serious questions about the future of the Fed, the conduct of monetary policy and the quality of our economic decision-making.

I think that there is no rush to enact the most sweeping overhaul of financial market regulation since the 1930s. The president should take his time, listen to a wide variety of constituents and most of all, never, ever compromise the integrity or independence of the Federal Reserve. Right now, it's the only competent part of government and the only institution keeping us safe from further financial folly.

Ron Insana has returned to

CNBC

as a senior contributor to the nation's premier business news network. Prior to his return, Insana was a managing director at SAC Capital Advisers, a $12 billion hedge fund run by Steven A. Cohen. Insana was the president and CEO of Insana Capital Partners, a $120 million fund of funds manager, from March 2006 through August 2008. For over two decades, Insana has been a familiar face on business television, spending 17 years as a veteran anchor at

CNBC

. Before working at

CNBC

, he worked as managing editor and senior anchor for the

Financial News Network

, where he began his career in 1984 as a production assistant. He graduated with honors from California State University at Northridge.