New at Reason: The Future of Too Big to Fail and Wall Street Regulations

The role regulation played in the creation and evolution of the recession and financial crisis is a very hot topic. Undoubtedly, regulators helped create the mess, though how and to what degree remains undecided. But everyone agrees that some changes need to be made to the financial sector’s regulatory structure.

President Barack Obama unveiled his proposal to fix Wall Street regulation on June 17, 2009. If enacted, the plan—written with the help of Federal Reserve Chairman Ben Bernanke and Treasury Secretary Tim Geithner—would be the biggest expansion of federal regulation of the financial sector since the Great Depression. Congressional Republicans offered a counter plan on July 23, 2009, that largely seeks to end US policy of too big to fail.

Yet, there are some positives in the Obama plan, and not all is well with the GOP plan. But even though neither plan is perfect, we know Congress is going to pass a bill overhauling financial services regulation. Given that some reform is going to happen, and is probably necessary, there are aspects of each plan that can be mixed and matched to prevent the government from expanding its reach into every corner of the financial market and instead simplify regulations to ensure taxpayer money does not wind up supporting failing financial institutions in the future. To that end, we have provided a condensed comparison of the two plans, what they propose, and what should be done in a new policy brief published today.

The policy brief is published here.
Download the PDF file here.

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