United States President Barack Obama on Wednesday announced the financial regulatory reform program, the program has two major axes, which are conferred on the Federal Reserve System risk oversight powers to avoid repeat of financial crisis again, and established consumer financial protection unit, home loans, credit cards and annuity insurance business management. However, these two topics controversial, is bound to arouse contending Congress.
According to the commercial times "reported that the Obama proposal instead of mass payment, will be the United States since 1930 's biggest financial norms change, it covers projects including strengthening federal reserve powers, allowing the Government to receive and close on the verge of collapse of major financial institutions, extended supervisory power to hedge funds and derivative products, etc, etc.
However at stake at the core of this reform, is Obama suggested the spindle to the fed in response to an increased risk in the financial system. Expanding the power of the fed, having to get Congress to take the necessary measures to mitigate the risk. At the same time, the Fed will remain on the big banks financial holding company, supervision on weekdays.
But Obama's majority instead of the gold chips bet on fed, I'm afraid it will cause height in Congress. Congress originally worried fed power in the gradual expansion of the financial turmoil.
In addition, a number of Federal Reserve officials are also worried that once fed shoulder system crisis oversight role, the police will let them inevitably involved the political fear of compromising their independence.
Obama change plan of gold, another major axis is to promote consumer financial protection units. He implied that the sector's areas of jurisdiction would be quite extensive, from automotive, student loans to more basic credit card and cash cards, etc. are included. The unit will work to ensure that consumers understand increasingly complex financial products, without accidentally stepping on the trap. However, because the units must be established by the Congress, Congress would agree with the Obama proposals or unknown.
In the eve gold to plan announced, Obama also strictly batch again accused the "Wall Street, Wall Street seems to be on the brink of the abyss of memories of the crisis is short than expected", or indirectly in response to the Government in the economy and the role of the market gradually open to criticism. Obama while confidence in the economic recovery, but he also forecasting the unemployment rate will probably go the United States to 10%
Comment on Obama's financial regulatory reform plan
The powers conferred on the Washington and, if necessary, take over large financial institutions (such as Lehman Brothers, etc.)
• Goal: to prevent a large financial institution failures, drag the entire financial system.
■ Evaluation: the idea is good. To avoid the collapse of Lehman Brothers last year after public opinion on Washington sleeves hand.
■ Rating: B +
The powers conferred on the Federal Reserve Board, monitor the most system associated with large financial institutions
• Goal: forced organizations to hold more capital, reduced liabilities buffering, limit the lever.
■ Evaluation: the pace of reform should not be too fast, to avoid the new capital requirements add to the current crisis.
■ Rating: difficult to score
The establishment of a new consumer protection agency
• Goal: develop consumer protection statute to prevent consumers borrowed afford mortgages, credit card loans, as well as the purchase is not suitable financial products.
■ Evaluation: Washington just a mandatory requirement to provide such financial products to let consumers make more informed choices. But increasing regulators would make the existing "duplication" of the problem is more complex.
■ Rating: C
Abolition of savings authority
• Goal: to prevent financial institutions among regulators, select one of the most weak to rule itself.
■ Comments: savings Authority already is dispensable, Washington has failed to really streamline the structure.
■ Rating: A (single decision); D (from the overall perspective)
Appeals to the Securities and Exchange Commission (SEC) and the commodity futures trading Commission (CFTC) strengthening coordination
• Goal: mediation mandate overlap between the two institutions
■ Comments: as early as the former Treasury Secretary Paulson March 2008 has raised the merger of the two, Obama but will backtrack.
■ Rating: F
Requirements for hedge fund registration; regulation of derivatives
• Goal: prevent derivatives markets dragged down the entire system.
■ Comments: good idea, but the programme drafting is wrong, that the regulator has the authority to "prevent market manipulation and abuse", existing regulations preventing manipulation also less?
■ Rating: C-
Reduce reliance on rating agencies, and calls for the securitization of mortgage for publishers, intermediaries to retain part of the loan
■ Comments: lower rating agencies role expectations. Reserved portion of the loan can also be used to combat those inventions that securities of the Bank.
■ Rating: B-
Founded by the regulators Committee "composed of" preventing systemic risk
• Goal: responsibilities shared fed in part to avoid the Congress that the Federal Reserve Board power is too large.
■ Comments: likely to be effective, but the Washington Committee's role is often to be known only after the actual operation.
■ Rating: difficult to score
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