Obama Lays Out ‘Sweeping Overhaul’ of U.S. Financial Oversight

[Turborama]

Source: Blomberg

By Robert Schmidt

-- President Barack Obama said his plan to refashion supervision of the U.S. financial system is needed to fix lapses in oversight and excessive risk taking that helped push the economy into a prolonged recession.

The proposal, much of which will be subject to approval by Congress, sets out the biggest overhaul of market rules in more than seven decades, adding an additional layer of regulation for the biggest firms. It would create an agency for monitoring consumer financial products, make the Federal Reserve the overseer of companies deemed too big to fail, and bring hedge and private equity funds under federal scrutiny.

“This was a failure of the entire system,” Obama said in prepared remarks for a White House event with the leaders of the Treasury, Fed and other regulatory agencies. “An absence of oversight engendered systematic, and systemic, abuse.”

The announcement marks the beginning of what promises to be a political battle that’s likely to alter the president’s plan. Obama, who has called the “sweeping overhaul” of regulations one of his top domestic priorities, said wants to sign legislation to enact it by the end of the year.

Read more: http://www.bloomberg.com/apps/news?pid=20601103&sid=aJTI_GE0pf8Y

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US unveils banking reform plans

Source: BBC

The US government has announced a major reform of banking regulation to prevent future financial crises.

The overhaul of the banking system will require big banks to put more money aside against future losses and is meant to curb excessive risk taking.

Consumers will get a special agency to protect their interests and regulate mortgages and credit cards.

The US central bank, the Federal Reserve, will be given the authority to monitor major financial institutions.

On Wednesday President Obama spoke about the reforms, describing them as the biggest shake-up of the US system of financial regulation since the 1930s.

Read more: http://news.bbc.co.uk/2/hi/business/8104700.stm

[ThomCat]

1. "make the Federal Reserve the overseer of companies deemed too big to fail"

Um... Does anyone see the huge glaring problem here?

Those companies that are too big to fail happen to OWN the Federal Reserve. Not figuratively, or symbolically. They really do own it. They are on the charter of the Fed as the owners. And they appoint the people in leadership positions in the Federal Reserve. The people in leadership positions in the Federal Reserve all COME FROM those companies that are too big to fail and have contacts and loyalties in those companies.

This is one huge snarled mass of conflicts of interest guaranteed to make sure that those companies never, ever get any oversight that will be even slightly adversarial. How is that oversight?

:(

[steven johnson]

2. Obama Lays Out ‘Sweeping Overhaul’ of Financial Rules

At a minimum the new regulatory structure should regulate credit default swaps, correct Gramm-Leach-Bliley and eliminate shopping for the most lax regulator.

June 17 (Bloomberg) -- President Barack Obama proposed the most sweeping overhaul of the U.S. financial regulatory system in 75 years, seeking to correct a “cascade of mistakes” that toppled major securities firms, froze credit markets and destroyed $26.4 trillion in stock market value around the world.

The proposal, much of which will be subject to approval by Congress, sets out the biggest overhaul of market rules in more than seven decades, adding an additional layer of regulation for the biggest firms. It would create an agency for monitoring consumer financial products, make the Federal Reserve the overseer of companies deemed too big to fail, and bring hedge and private equity funds under federal scrutiny.

“This was a failure of the entire system,” Obama said at a White House event that included the leaders of the Treasury, the Fed and other regulatory agencies. “An absence of oversight engendered systematic, and systemic, abuse.”

While lax government regulation helped lead to the crisis, Obama suggested the changes he’s proposing don’t fully reshape U.S. oversight. Aside from eliminating one banking agency, the Office of Thrift Supervision, it leaves much of the current system in place -- a nod to the difficulties of getting a law passed amid congressional and interagency turf battles.
Obama Lays Out ‘Sweeping Overhaul’ of Financial Rules