The President’s financial sector regulation plan is out today. Here is what he will likely propose in his speech at 12:50 today:
New Agencies
- The creation of a Financial Services Oversight Council, chaired by the Treasury Secretary, and comprised of the major regulating agencies (SEC, Fed, FDIC, etc).
- The creation of a National Bank Supervisor with oversight of all federally chartered banks; this would shift some responsibilities away from the FDIC.
- The creation of a Consumer Financial Protection Agency tasked with protecting consumers from “unfair, deceptive, and abusive practices” by credit card companies, mortgage lenders, etc.
- The creation of an Office of National Insurance within the Treasury Department with oversight of the nation’s insurance sector.
- The create a new “resolution” authority to manage financial institutions not covered by the Fed. The goal of this authority to avoid bailouts in the future (at first glance though it seems to be just an institutionalized way to bailout firms).
Increased Authority
- Give the Federal Reserve oversight of any financial institution that could destabilize the market
- Give the Federal Reserve oversight of all payment, clearing, and settlement systems
- Increase capital reserve requirements and a special focus on firms too interconnected to fail
- Increase transparency requirements for consumer related financial products
- Create higher standards for providers of financial products for consumers
- Require hedge funds and private equity to register with the SEC
- Enhance regulation of securitization markets: raise market transparency requirements, raise regulation of credit rating agencies, and require that security originators retain financial interest in their loans
- Establish comprehensive regulation of OTC derivatives
The White House will also be promoting international regulatory reforms, including: higher captial reserve ratios for international banks, improved oversight for global systemic risk, more coordination between international firms, and better crisis management tools.
Check back after this afternoon for a review of the President’s proposal.