Obama to Propose Federal Reserve as Super-Regulator in Reforms
Details are leaking out about the administration's plan to govern financial markets going forward. While the new regulations do not go as far as some expected, the Fed stands to gain much more power.
The administration of President Obama is expected to recommend sweeping reforms of the financial services and banking industries this week as promised. But according to the Wall Street Journal, the Federal Reserve has been marked as an important part of the new regulatory environment being proposed.
Interactive Data - Who Are You Searching For?
Social Security Search. Bankruptcy Information. Directory Assistance (EDA). Real Estate Listings. Death Index.
Officials are saying that the recommendations are in a “white paper” that will be released Wednesday. In it, they propose to increase the power of the Fed to oversee the largest financial institutions.
Part of the plan also involves giving the government power to break up large institutions that have failed, like the FDIC’s power over banks, and creating a new regulator that would specifically monitor consumer credit products. The plan would call for an end to the Office of Thrift Supervision.
While the plan does not go as far as many expected, it is thought that it will meet will stiff resistance, according to The Journal. At the heart of the opposition will be increased power for the Fed, an institution already under scrutiny from many. (Editor’s Note: insideARM will be detailing some of that scrutiny in a feature slated to run Wednesday)
Details of the plan are guarded, with “those close to the situation” being quoted by The Journal. Also included in the plan is a council that will oversee “financial institutions, products, or practices that could pose a systemic risk to the economy.” But this will also be the purview of a newly empowered Fed, and it is not clear whether the council or the Fed will have final say on tactical moves.
<<< Return to Newsletter
Care to Comment?
(Please read our comments policy first.)
Tell us what topics you're interested in and we'll keep you posted. Enter your email address below.
Related Resources
News
Analysis
Publications
Research
Comments
Comment from N Busta on June 15, 2009 at 6:34PM EST
As most of us already know the Fed is the one responsible for the mess we are in right now. They are the Banks in disguise so nothing would change they would just offically have more controland giving them more control is a very bad idea...
Comment from say what? on June 17, 2009 at 9:26AM EST
The Fed is responsible??????? Banks enter into unregulated legal agreements (which circumvented deposite requirements) that allowed them to take counterparty positions and subsequentley lots of risk also is a leading cause. Not to mention that banks were writing bogus loans to any farm animal that had a pulse. The conflicts of interest with how bonuses are paid certainly made the water very muddy. The bonus agreements should have clawback provisions that require repayment if it is determined that there was any neglegence occured. Just my $.02