Treasury Rolls Out Overhaul of Financial Regulators

[stubtoe]

Source: NYT

The Bush administration on Monday introduced the broadest overhaul of Wall Street regulation since the Great Depression, presenting a 218-page proposal that would, for the first time, create a set of federal regulators with authority over all players in the financial system.

The plan is unlikely to be put in place anytime soon, and in presenting the blueprint, Henry M. Paulson Jr., the secretary of the Treasury, insisted the changes were intended to address long-term problems with the way Washington oversees financial markets, rather than a quick fix for the current crisis.

<snip>

Still, elements of the plan — including a proposal to expand the authority of the Federal Reserve to examine investment banks and other financial institutions that have previously roamed free of federal oversight — clearly speak to the recent tumult on Wall Street that has hurt the economy.

<snip>

Democratic leaders are already drafting bills to impose tougher supervision over Wall Street, and some say that Mr. Paulson’s plan does not go far enough in reining in risky practices among banks.

The administration’s proposal will do almost nothing to regulate the alphabet soup of sophisticated financial products that have fueled the current financial crisis. And it will not rein in practices that have been linked to the mortgage crisis, like packaging risky loans into securities carrying the highest ratings.

Hedge funds and private equity firms, which have enjoyed freedom from government oversight for years, would finally fall under federal watch. But that oversight would be minimal, enabling the government to do little beyond collecting information until a widescale financial crisis has already occurred.



Read more: http://www.nytimes.com/2008/03/31/business/31cnd-regulate.html?_r=1&hp&oref=slogin

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More bark than bite, but a Democratic Administration could put some real teeth in this.

[Donnachaidh]

1. Someone had better go over this proposal with a fine tooth comb and a magnifying glass

NOTHING coming from the Bush Admin will EVER be done to protect the public from the vultures on Wall Street. Dissect this line by line. :grr:

[asthmaticeog]

3. Here's a big hint that it's a sham:

"...create a set of federal regulators with authority over all players in the financial system..."

Um, don't we already have something called CONGRESS that has exactly those powers? This is probably just another way to keep matters that should be points of public policy debate safely and quietly contained within the "privileged" Exec branch.

[JDPriestly]

6. To add to your comment for those who might not know

the Constitution so well:

Article I
Section 8. The Congress shall have power to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States; but all duties, imposts and excises shall be uniform throughout the United States;

To borrow money on the credit of the United States;

To regulate commerce with foreign nations, and among the several states, and with the Indian tribes;

To establish a uniform rule of naturalization, and uniform laws on the subject of bankruptcies throughout the United States;

To coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures;

To provide for the punishment of counterfeiting the securities and current coin of the United States;

To establish post offices and post roads;

To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries;

To constitute tribunals inferior to the Supreme Court;

To define and punish piracies and felonies committed on the high seas, and offenses against the law of nations;

To declare war, grant letters of marque and reprisal, and make rules concerning captures on land and water;

To raise and support armies, but no appropriation of money to that use shall be for a longer term than two years;

To provide and maintain a navy;

To make rules for the government and regulation of the land and naval forces;

To provide for calling forth the militia to execute the laws of the union, suppress insurrections and repel invasions;

To provide for organizing, arming, and disciplining, the militia, and for governing such part of them as may be employed in the service of the United States, reserving to the states respectively, the appointment of the officers, and the authority of training the militia according to the discipline prescribed by Congress;

To exercise exclusive legislation in all cases whatsoever, over such District (not exceeding ten miles square) as may, by cession of particular states, and the acceptance of Congress, become the seat of the government of the United States, and to exercise like authority over all places purchased by the consent of the legislature of the state in which the same shall be, for the erection of forts, magazines, arsenals, dockyards, and other needful buildings;--And

To make all laws which shall be necessary and proper for carrying into execution the foregoing powers, and all other powers vested by this Constitution in the government of the United States, or in any department or officer thereof.

Congress has abdicated its authority to coin money to the Fed, a privately owned entity. The Fed is now controlled by conservatives, and it favors the Republicans. See my post above for a link showing how the Fed has manipulated the interest rates to make it look like the Republicans are good for the economy. They aren't. The Fed just rewards Republican presidents with growth promoting low interest rates at crucial periods.

[truedelphi]

16. Thank you for posting that. Jim Rogers (Soros' business partner)

Thinks that the Fed Reserve should be abolished.

Decent video of where he is coming from
http://www.youtube.com/watch?v=lTXEWh2yT_g

[sicksicksick_N_tired]

10. No doubt. What's disconcerting is the confidence of retaining control over the executive, though.

The BushCO/neocon crew have consistently and persistently attempted every means possible to expand executive power. They seem to have an unusual confidence to retaining control over that branch. That's concerning, to me.

[SharonAnn]

13. Let's see. I've read that the SEC and Bank Oversight are badly underfunded

So why would we want to "consolidate" other agencies oversight responsibilities in to those organizations?

Why, they would be able to do even less oversight.

Bingo!

[JDPriestly]

4. A link to some interesting information on the Fed

and why the Republicans like it so much.

http://home.comcast.net/~david_brubaker/FedIntRateChart.v3.htm

The Fed is bad news. It is pro-Republican. The Fed caused this mess. Appointing them to regulate finance is like putting the fox in to guard the hen house. No way, Jose. Forget this. And the Democrats in Congress are so naive, they will probably fall for it.

[truedelphi]

15. The number one thing I learned from listening to Rogers (Soros' business partner)

Is that THERE SHOULD BE NO REGULATION in terms of what Bush is proposing.

The main thing that should happen is that if these fat cats set up a bank and the bank fails, so friggin' be it.


No more socialism for the rich and their banks.
It is not fair to socialize banks - using taxpayer money for bail outs to prop up the loss column, yet let bankers grab the profits.

[JDPriestly]

2. Regulation of the Fed needs to be tightened first.

The Fed at this time is too Republican. Greenspan should have raised interest rates long ago. He didn't do that because he did not want to slow growth during a Republican presidency. Compare his tactics during Bush's reign to those he employed during the Clinton presidency. He squeezed the Democratic administration as hard as he could demanding balanced budgets and imposing high interest rates.

Too many of us Democrats, myself included, have shunned the study of economics since the 1960s. The Republicans on the other hand are primarily motivated by their sick view of economics which puts the interests of the rich over those of the middle class and poor. No matter how boring we think it is, no matter how much we would rather focus on the personal, on the human, on needs and filling them, we need to study economics.

Naomi Klein's book is a good start. It gets a person fired up. But it does not provide the fundamental knowledge we need to understand this. Would some of the experts on economics on this website please suggest some good books and resources that those of us who are deficient in this area could read/study?

[defendandprotect]

5. We need to remove the FED from our economic decisions . .

they are decisions for our elected officials to make ---

not a private bank --- !!!

And, we need to ensure that printing of our dollar bills is returned to the TREASURY --- !!!

[sicksicksick_N_tired]

7. If anything, I got the impression hedge funds and private equities would most benefit from,...

,...this new 'regulatory proposal'.

Those poor Carlyle investors are taking an aweful hit, these days, doncha' know.

Seriously, though,...why the hell would ANYONE believe this administration seeks to level the economic field and actually heal the economy THEY STILL ADVOCATED WITHIN THE LAST FEW MONTHS IS OVER-REGULATED?

I mean, please! :eyes:

[DCKit]

8. Creating laws is the domain of Congress.

Somehow I'm thinking this proposal is 218 pages of hot air and little, if any, substance.

They're attempting (again) to shift the focus with an empty, ineffective proposal to prevent Congress taking substantive action until the looting is complete.

However, now that THEY've opened the door and admitted that greater (even some would be nice) regulation is required, look for the Dem proposals to come rolling out.

[LeftHander]

9. de-regulated greed is a cat that is hard to put back in the bag....

12 years of GOP trading regulations for campaign donations has resulted in the mess we are in.

[IndependentDem]

11. does anyone think that this has more to do with the election than the economy?...

it seems odd that this is happening now, after Obama gives his speech highlighting the need for regulation reform. I have a feeling this is going to end up in a lose/lose situation. If Obama/Clinton do not support the regulation reform i think that McCain will be able to use that in the GE... if they do support it then they will not be able to use that as an argument against McCain.

[Jeff In Milwaukee]

12. WARNING! WARNING! WARNING!

When the Bush Administration "reforms" something, it inevitably means a massive gift bag for his biggest corporate supporters. As bad as this mess is, the absolutely LAST thing any of us want is to allow this Administration to "fix" the problem. Congress should set up a short-term bail-out to get us through this year, and leave the real reform to the next administration.

Mark My Words: They're about to rob us blind!

[SharonAnn]

14. Yes, this administration created these problems (or at least made them much worse)

and they are the LAST ONES we would want fixing these problems.

[truedelphi]

17. It's a double robbery

First the tax payer largesse is set aside to pay out the failing banks.

So in one fell swoop they are socialize-ing Wall Street - the taxpayer is now responsible for the losses, while the bankers still get to keep any gains.

Then because this nation has to import two thirds or so of our oil, we need to also pay for oil. In American dollars. But through the churning of the printing presses needed for the above, the currency is devalued Big Time.

Where I see us ending up is in total impoverishment -- like Romania or somewhere.

[Turbineguy]

18. Breaking government

[Democrats_win]

19. It's to be called the "Honest Crook Initiative"