On Wednesday President Obama is set to announce new regulatory plans for the financial industry.
The Obama administration [has released] a series of proposals that would involve the government much more deeply in the private markets, from helping to steer consumers into affordable mortgage loans to imposing new limits on the largest financial companies, in a sweeping effort to prevent the kinds of risk-taking that sparked the economic crisis.[...]
[...]It would vastly increase the powers of the Federal Reserve in an effort to create stronger and more consistent oversight of the largest companies and most important markets.[...]
My view: Vastly increase? How about we start taking powers away from the Federal Reserve.
[...]It also would create a new agency to protect consumers of mortgages, credit cards and other financial products.[...]
Many of the specific proposals will require legislation, and [the] announcement will drop the plan into an already heated debate on Capitol Hill about the eventual shape of reform. The financial crisis has forced broad consensus that changes are necessary, but there are wide disagreements about the details.[...]
My view: Just bring back Glass-Stegall.
[...]The proposed Consumer Financial Protection Agency would have broad authority to regulate the relationship between financial companies and consumers of mortgage loans, credit cards, checking accounts and other financial products. It would define standards, police compliance and penalize delinquent firms. Other agencies, particularly the Federal Reserve, would surrender some powers.[...]
My view: Wait a minute, the President just said it would vastly increase the Federal Reserve… which is it?
[...]And the agency would have a mandate to increase the availability of financial products in lower-income and underserved communities, in part by enforcing the Community Reinvestment Act, which requires banks to make loans everywhere that they collect deposits.[...]
My view: This is what started the sub-prime crisis to begin with… they want to start that all over again?
[...]The agency would gain new authority over the largest financial firms, including commercial banks such as J.P. Morgan Chase, investment banks such as Goldman Sachs and insurance companies such as MetLife. It would require those firms to hold greater capital reserves against potential losses, and constrain their ability to make high-risk investments.[...]
[...]The administration also will propose a new authority to dismantle these massive firms if they fall into trouble, through a process akin to bankruptcy.
And it will try to impose new oversight on financial markets for the sale of derivatives and asset-backed securities, investments made from mortgages and other loans.[...] Source: Washington Post
Federal Government white paper on financial regulation:
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