Financial Regulatory System Overhaul Proposal

[TJ_98370]

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After the horse runs away, close the barn door.



The Bush administration's proposal to overhaul the financial regulatory system underscores a philosophical shift in Washington toward a greater role for government in overseeing markets, analysts said.

The overhaul, detailed yesterday by Treasury Secretary Henry M. Paulson Jr., seeks to repair regulatory weaknesses that contributed to the subprime mortgage crisis and resulting financial market turmoil and credit crunch, which have pushed the economy toward recession.

Among Paulson's proposals: expand the Federal Reserve's authority over the financial system to "go wherever in the system it thinks it needs to go for a deeper look to preserve stability."......

.....Paulson yesterday proposed the Fed be given power to oversee not only commercial banks, but also securities firms, hedge funds, and commodity pools, and take action when their activities threaten the stability of the financial system.

In addition, Paulson called for filling cracks in the regulatory system by consolidating agencies, such as the Securities and Exchange Commission, which oversees stocks, bonds, and other securities, with the Commodity Futures Trading Commission, which oversees trading in commodities, such as oil and agricultural products. Paulson also called for consolidating several federal banking regulators under a single agency and expanding federal oversight of banking, mortgage, and insurance industries now regulated by states...........

.....Secretary of State William F. Galvin said many of the problems in financial markets are the result of lax federal regulation. Very often, he said, state authorities stepped in to expose and stop abuses. "This proposal is just another in a long line of attempts to remove or dilute the role of states as consumer protection in the financial area," Galvin said. "There is room for efficiencies in federal regulation of financial markets, but it is of little use to the people if we wind up with a single watchdog - and the watchdog sleeps."

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As Treasury Secretary Henry M. Paulson Jr. on Monday formally laid out an ambitious plan to overhaul the regulatory apparatus that oversees the country's financial system, senior lawmakers and lobbyists from industries opposed to the plan predicted that most of it would be dead on arrival.

The plan, produced by a lame-duck Republican administration facing a Democratic Congress, would significantly expand the authority of the Federal Reserve to oversee financial markets. It would consolidate federal agencies that regulate the securities and commodities futures markets and eliminate a third agency, the Office of Thrift Supervision, which was created during the savings and loan debacle of the late 1980s.......
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[Lake Hills Renter]

Not to mention more big government. Wasn't DHS enough?