The US legislative committee in charge of overhauling banking regulation is set to drastically reduce the Federal Reserve's supervisory remit, reports said on Monday.

Reports in the New York Times, a US broadsheet, and the Financial Times, a business newspaper, said the Fed would lose its regulatory authority over all except the 23 biggest banks in the country under a compromise being hammered out by the Senate committee on banking, housing and urban affairs.

State banks will be overseen by the