The Obama administration aims to quickly beef up regulation of the US financial system to stave off economic implosion, the New York Times reports. Plans include tightening rules on hedge funds, credit rating agencies, and mortgage firms, and keeping a closer watch on financial instruments at the center of the current crisis, the Times notes. The changes will require both new rules at federal agencies as well as new legislation.
The administration intends to end conflicts of interest at credit rating agencies, which received payments from the same risky financial instruments they rated highly. SEC oversight will likely be required for hedge funds and mortgage brokers. Credit-default swaps, at the center of AIG’s problems, may have to be traded through a central clearinghouse and possibly on an exchange, which would make it easier for regulators to supervise them. Executive perks are expected to be limited until institutions repay government bailout funds.