President Obama said his Administration's proposals for financial-regulatory reform are meant to promote market innovation and long-term economic health without allowing for abuse.
The Administration’s proposals need to be implemented quickly, senior Administration officials said Tuesday evening in a discussion of the plans that include abolishing the Office of Thrift Supervision and creation of a financial consumer-protection agency.
An official said that the proposals would be sent to Capitol Hill imminently, adding that “the costs of inaction are apparent.” Indeed, the Administration released more details on the proposal to Congress with the distribution of an 85-page white paper. See the paper at the bottom of this story.
Much of the information about the proposals and the Administration’s five key elements to reform had already come out.
Those five elements are:
--Strong oversight of financial firms.
--Strengthening the regulation of core markets and infrastructure.
--Strengthen consumer protection.
--Ensure the government has the tools to effectively manage financial crises.
--Ensure high standards, not just in the U.S. but also globally.
The Office of Thrift Supervision will be abolished and taken under the Office of the Comptroller of the Currency, which will be renamed the “National Bank Supervisor,” an official said. That official added that the thrift charter would be eliminated to “eliminated the possibility for arbitrage between federal charters.”
The officials said a financial-services oversight council would be created, and chaired by the Treasury Department. They said firms would face higher capital requirements and higher scrutiny.
The Federal Reserve is slated to serve as the supervisor at the holding-company level.
Also, there would be a “fundamental reassessment of the design and structure of regulatory capital requirements.” Hedge funds and other private pools of capital would be regulated.
The Administration is seeking “appropriate” regulation of derivatives, credit-default swaps and other securities, and wants to make sure the securities “are not marketed incorrectly to unsophisticated parties.”
The Administration will also call for “a new, strong, independent agency with full authority to protect consumers from unfair practices.”
The consumer agency would not have authority over products regulated by the Securities and Exchange Commission, but instead the SEC and that agency would coordinate, which the Administration anticipates “will keep both agencies strong and focused on their core mission.”
All big firms would have to have a plan for orderly resolution to “reduce the impact of failure,” an official said.
Also, the U.S. will work “to make sure there are high standards, not just in the United States but globally,” the official said, adding that the government would continue to work with the G-20, Basel committee and the entire international community to make that happen.
Officials said they “have not done a detailed cost estimate” of the changes.
White Paper
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