President Obama has just released plans for regulatory oversight of the creaky financial system. The bulk of it focuses on bringing more of the system under fewer agencies, and on requiring less-regulated or unregulated entities like hedge funds to adhere to new rules and regulations. All are important proposals aimed at creating a more sound financial framework that keeps everyone’s money safe and capital flowing through the economy. But in the short-term, it will mainly be high-level, focused on whupping Wall Street’s excesses into shape. Here’s a little FAQ on a few of the plan’s key points. (We recommend this package at the Wall Street Journal for more in-depth look at the proposal.)
* Abolish the Office of Thrift Supervision. What’s this about? One argument for its abolishment was the oversight for the savings and loan industry, which had troubles since the 1980s. So it transforms, more like, into the National Bank Supervisor. It follows, given all the consolidation in the financial sector in the last two decades.
* Create a Consumer Financial Protection Agency. What the heck is this? This is the stuff that matters. This agency would work with state regulators to better control swindling by mortgage lenders and credit card companies.
* Give the Federal Reserve broader oversight. What does that mean, exactly? Will they be printing personalized money? Almost, but no. The Fed will now oversee parent companies, bank holding companies, as well as economic and monetary policies. But we can safely assume that we’ll all trade in the same currency, for now, and that the faces will remain the great presidents, not BSB (Ben S. Bernanke).
But it’s all just a plan, for now, and some of it over-broad and ambitious. Next up, it will be worked up into legislative language and put before Congress. By then, who knows where the financial system will be. Ah, government.
Here’s Barack Obama talking about the plan on Bloomberg: