http://news.bbc.co.uk/2/hi/business/7322107.stm

The report in question: http://www.treas.gov/press/releases/reports/Blueprint.pdf

Quote :

"he US Treasury has revealed its blueprint for the biggest overhaul of regulation of the financial sector since the 1930s. Critics have said that the credit crunch and resultant market turmoil made a strong case for change. But Treasury Secretary Henry Paulson rejected claims that existing regulations have led to the turmoil. And he said the plan should not be implemented until current difficulties roiling financial markets are resolved. New powers The plan would beef up the powers of the Federal Reserve, which earlier this month engineered the purchase of troubled investment bank Bear Stearns by JP Morgan. It would give it greater oversight of all kinds of financial institutions from hedge funds to insurance companies. Our current regulatory structure was not built to address the modern financial system US Treasury Secretary Henry Paulson "Government has a responsibility to make sure our financial system is regulated effectively. And in this area, we can do a better job," Mr Paulson said. The government says the proposals are an effort help US firms become more competitive in the global economy. The 218-page report was commissioned before credit markets began to seize up in August last year. Fears of exposure to high-risk assets have made banks and financial institutions increasingly reluctant to lend to each other. Bear Stearns got into trouble when other banks refused to lend it money over fears that it had too many bad debts due to the sub-prime mortgage crisis. Market stability The proposals give sweeping powers to the Federal Reserve - enabling it to tackle the kind of turmoil that is currently hitting financial markets. KEY MEASURES Fed becomes market stability regulator Second regulator to oversee banks Business conduct regulator to protect consumers Mortgage market to come under greater scrutiny The Fed would become "market stability regulator" - allowing it to examine the books of any financial institution deemed to potentially threaten the stability of the financial system. The overhaul will see a new organisation set up to take over the role of the five separate banking regulators. A body to regulate business conduct and consumer protection is also likely to be proposed. "Our current regulatory structure was not built to address the modern financial system," Mr Paulson said. "We should and can have a structure that is designed for the world we live in." "One that is more flexible, one that can better adapt to change, one that will allow us to more effectively deal with inevitable market disruptions and one that will better protect investors and consumers." Mortgage scrutiny Among other measures proposed is the creation of a commission to establish stricter criteria for firms involved in the mortgage market. Mortgages for sub-prime borrowers, those with poor or patchy credit histories, have been at the heart of the recent market turmoil that has resulted in billions of losses for big banks. A merger of the Securities and Exchange Commission, which regulates companies with publicly traded shares, with the Commodities Futures Trading Commission, which oversees commodities trading is also part of the proposals. The review into the sector began early in 2007 after the financial services industry complained that over-regulation from Washington meant US firms were not as globally competitive as they could be. Before travelling to Europe, President George W Bush said that he wanted congress to pass several pieces of legislation which he saw as "vital priorities". These include a housing law which would enable more homeowners who were battling to meet mortgage payments to refinance their loans. "

3/31/2008 11:36:47 AM

long over due.

3/31/2008 11:45:08 AM

I think the additional oversight is needed, but have mixed feelings on whether the Fed is the proper home. Beefing back up the SEC and/or some other entity might make as much sense. Of course there is also a case to be made that oversight should be tied to the entity that backs up the money.

3/31/2008 12:24:31 PM

Quote :

"The plan would beef up the powers of the Federal Reserve"

this is not good news to me

3/31/2008 12:28:07 PM

I'm not an expert on the fed by far, but any massive consolidation of power by the guvment scurrz me, though it could turn out to be good in the end. Not all government reaches are bad, just a lot of them.

3/31/2008 1:10:18 PM

^^ Indeed. After being such great stewards of our economy through the last decade, why not grossly expand their sphere of influence?

Pay no attention to the men behind the curtain.

And sure as fuck don't ask what your Federal Reserve is doing making equity investments in securities from failed banks or anything.

[Edited on March 31, 2008 at 9:53 PM. Reason : ...]

3/31/2008 9:29:44 PM

Anyone who's worked in a large organization or, reads Dilbert - is familiar with the "org chart" strategy. To hide their lack of any actual ideas about what to do, managers will make a big show of rearranging the boxes and lines that say who reports to whom.

"You now understand the principle behind the Bush administration's new
proposal for financial reform, which will be formally announced today:
it's all about creating the appearance of responding to the current
crisis, without actually doing anything substantive."

- Paul Krugman in today's NYTimes
http://tinyurl.com/2tcj7q

3/31/2008 10:24:02 PM

Imagine that. THe Federal government says that it needs more power. Who woulda thunkit?

3/31/2008 10:32:20 PM

The worst part is i feel like a majority of people will celebrate it saying "yay, now the Fed can fix our recessions" or something similiarly stupid.
Im pretty sure most media outlets aren't going to bring up the cons to this although I have heard a few question the FED when they bailed that financial company out (their name slips my mind right now)

4/1/2008 12:09:05 AM

Quote :

"Imagine that. THe Federal governmenta transnational banking institution says that it needs more power. Who woulda thunkit?"

The company was Bear Sterns. Their bad mortgages? You own them now. Thank the banking wizards for that catastrophe.

"But maybe they'll sell for a profit!!!1"

4/1/2008 12:32:26 AM

Also coming soon...



We Do Our Part!

4/1/2008 12:34:00 AM

More power to the Federal Reserve? Are they trying to wreck our economy?

Given the state of things, I agree that more oversight and more checks/balances are needed. However, most of that should be set on the people who control the money.

4/1/2008 2:35:45 AM

i'm torn on this...the rules we had were created at like the civil war or some shit...but on the other hand i got a feeling most people will look at this like terdfurguson

4/1/2008 4:57:59 AM

Quote :

"RON PAUL: Before the Joint Economic Committee, April 2, 2008: Hearing on "The Economic Outlook" Mr. Chairman, I have never been opposed to regulation, although my idea of regulation differs from that of many people in Washington. The free market and its forces of supply and demand are the most effective regulator of the private sector, and have never been known to fail absent government intervention. But piling more public sector regulation on the private sector will have a detrimental effect on the health of our financial system and sow the seeds for the next financial meltdown. What we in Washington should be discussing is increased regulation and scrutiny of public sector regulatory and oversight agencies such as the Federal Reserve Board, the SEC, and others. The Federal Reserve's actions got us into at least one depression in the last century, and have led to continued cyclical difficulties, including the current economic slowdown. Back in the 1970s, government-caused inflation reached levels high enough that the Nixon administration decided to implement wage and price controls. Placing blame on greedy speculators, unscrupulous mortgage originators, or panicky investors, is a common reaction on the part of government. The solution called for, despite the numerous documented failures of government regulation, is always more regulation, more government involvement in and control over the economy, and less free enterprise. Never is the blame placed squarely where it belongs, which is on the shoulders of legislators and regulators whose actions distort the market, prohibiting legitimate market activities and encouraging the development of labyrinthine and opaque financial schemes. The latest regulatory plan from the Treasury Department, with the potential to turn the Federal Reserve into a super-regulator overseeing state-chartered banks and bank holding companies, and acting as a guarantor of market stability, is another in a long line of half-baked government responses to financial difficulty. Recession after recession has not impressed upon government leaders the reality that the Federal Reserve's monetary policy activities are what lead to market instability. The business cycle, contrary to what Secretary Paulson and others seem to believe, is not endemic to the free market. It is always and everywhere the result of monetary inflation and subsequent malinvestment, which when it is discovered must of necessity be liquidated in order for a true recovery to occur. Delaying the liquidation will only prolong the crisis and ensure that the next crisis will be more severe. Every government intervention will result in a distortion of the market and a subsequent shock somewhere down the line in the future. It is about time that we recognize the failure of government intervention, get our hands out of the private sector, and for once allow the market to function. "

4/6/2008 8:57:47 PM