Geithner, Summers Outline New Regulatory System
By Kevin Spak, Newser User
Posted Jun 15, 2009 8:33 AM CDT
Treasury Secretary Timothy Geithner testifies on Capitol Hil on June 9, 2009.   (AP Photo)

(Newser) – The current financial regulatory system “is riddled with gaps, weaknesses, and jurisdictional overlaps,” Treasury Secretary Timothy Geithner and Obama economic guru Larry Summers write in today’s Washington Post. They outline, in broad strokes, their plan to fix it:

  • Capital and liquidity requirements will be raised across the board.
  • “Too-big-to-fail” firms will be subject to supervision from the Federal Reserve and a council of regulators.

  • Purveyors of asset-backed securities will have to retain a financial interest in those securities’ performance.
  • They’ll also face “robust reporting requirements,” intended to limit investor reliance on rating agencies.
  • Futures and securities regulation will be streamlined, and all derivatives will be subject to regulation.
  • The administration will set up a “resolution mechanism” for dealing with big, failing firms in “extraordinary circumstances.”
  • The US will push for upgrades in regulation and supervision worldwide.

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Showing 3 of 5 comments
chas_m
Jun 15, 2009 9:18 AM CDT
The outline sounds very good, I hope Congress will act swiftly on this.
psycada
Jun 15, 2009 6:46 AM CDT
If it involved the FED, it's a bad policy, period.
gilgordan
Jun 15, 2009 5:41 AM CDT
Guess Cong has pushed these two to make something happen. Suggestion is below. At last, the Congress has seen the light on this issue. It can not be glossed over, but requires a full vetting of what has been going on between the Regulatory Agencies and Financial Services Industry(Banks, Insurance, and s Securities) At this point in time it is critical to give oversight to one regulatory body with power of concurrency to others in a new regulatory oversight configuration. Here is an option: FED oversees all securities and exchanges that have systemic fiscal and monetary risk to the economy and will provide concurrency to FDIC and OCC based on their primary, further it exchanges oversight responsibility with other Global Central Banks to assist them and contribute to our systemic risk. FDIC oversee all insurance related financial providers with concurrency from FED on overlap of financial products from their primary responsibility OCC oversee all traditional banks as regulated depository and loan products with concurrency on overlap products of primary regulator. This in effect eliminates or subrogates SEC, OTS, State Insurance Regulators. This will probably work to rebuild trust in the US financial system with the rest of the Central Bank in the Globe.