The Obama Administration has announced plans to overhaul the US financial regulation system. The plan details a series of proposals to involve the government to a greater degree in the activities of financial firms and institutions to protect the integrity of financial markets. The plan would also impose more stringent limits on the largest companies to curb risk-taking measures.
Highlights of the Administration’s proposal include:
- Empowering the Federal Reserve Board (Fed) with new powers to serve as the consolidated supervisor for holding companies of large interconnected financial firms, with authority to conduct examinations and increase capital requirements for those companies.
- Giving the Fed oversight of payment, clearing and settlement systems.
- Strengthening the regulation of credit rating agencies.
- Creating comprehensive regulation of over-the-counter (OTC )derivatives products including credit default swaps (CDS).
- Establishing a new federal consumer financial protection agency with sweeping authority to protect against unfair or deceptive practices.
- Creating a systemic risk council chaired by Treasury Department to make recommendations on systemic threats.
- Reducing the susceptibility of money market mutual funds (MMMFs);
- Improving accounting standards and working toward a single set of global accounting standards.
- Eliminating all specialty bank charters including thrift and industrial loan company charters, credit card banks, trust banks and nonbank financial institutions.
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