Historic Overhaul of Finance Rules
By DAMIAN PALETTA
WSJ
WASHINGTON -- President Barack Obama urged policy makers to rewrite the rules governing U.S. finance, unveiling far-reaching proposals that would affect nearly every aspect of banking and markets.
The White House hopes Congress can complete work on the plan by year's end. But it is sure to face opposition both from some on the right who say it threatens to throttle free markets and others on the left who say it doesn't go far enough. Some in Congress are cautioning against haste.
The proposals are the latest instance of the administration seeking to expand its reach in the private sector. White House officials said the trauma of the current crisis shows a more muscular federal arsenal is needed to protect the financial system.
(More here. Below are some reactions from the WSJ:)
Economists React: Regulatory Overhaul, Sensible or Burdensome?
Economists, bloggers and others weigh in on the administration’s regulatory overhaul proposal.
* The proposals are generally quite sensible. The unfortunate aspect is that political constraints have caused the administration to stop short of a full solution in certain areas, most notably in the consolidation of regulatory functions into fewer hands. Nonetheless, the country should be better off if these proposals are passed than if we were to remain as we are now. –Douglas Elliott, Brookings
* The Obama administration deserves a C-, which is not a passing grade in graduate school. This thing will now invite the worst kind of mud wrestling in DC. We could have done so much better if Obama had been willing to be real about what went wrong and what needs fixing. There were some good points, particularly about too big to fail and over-the-counter derivatives trading. But most of the good ideas are presented vaguely, and are surrounded by bad ideas and huge omissions. Important problems and remedies, such as U.S. housing policies that subsidized leverage and regulatory rules that mis-measure risk, are ignored completely or mentioned in passing. Too much weight is attached to populist objectives. And the huge reallocation of power toward the Fed is inadvisable. –Charles Calomiris, Columbia University Business School
* In seeking to undo the damage inflicted over the past decade by misguided government policies, the sweeping financial regulatory reform announced today by the Obama Administration will simply ensure that the current destitution of the American financial services industry will become permanent. As was the case with the deeply flawed Sarbanes-Oxley legislation of 2002, this move will further burden U.S. industry with unnecessary regulation that will decrease our ability to compete globally. –Peter Schiff, Euro Pacific Capital
* Cheers for the extension of regulation, including capital requirements, to all “Tier 1 FHCs” — which, in the report’s jargon, means any financial institution, whether or not it’s a conventional bank, that might have to be rescued in a crisis. –Paul Krugman, Princeton-NY Times
(Continued here.)
WSJ
WASHINGTON -- President Barack Obama urged policy makers to rewrite the rules governing U.S. finance, unveiling far-reaching proposals that would affect nearly every aspect of banking and markets.
The White House hopes Congress can complete work on the plan by year's end. But it is sure to face opposition both from some on the right who say it threatens to throttle free markets and others on the left who say it doesn't go far enough. Some in Congress are cautioning against haste.
The proposals are the latest instance of the administration seeking to expand its reach in the private sector. White House officials said the trauma of the current crisis shows a more muscular federal arsenal is needed to protect the financial system.
(More here. Below are some reactions from the WSJ:)
Economists React: Regulatory Overhaul, Sensible or Burdensome?
Economists, bloggers and others weigh in on the administration’s regulatory overhaul proposal.
* The proposals are generally quite sensible. The unfortunate aspect is that political constraints have caused the administration to stop short of a full solution in certain areas, most notably in the consolidation of regulatory functions into fewer hands. Nonetheless, the country should be better off if these proposals are passed than if we were to remain as we are now. –Douglas Elliott, Brookings
* The Obama administration deserves a C-, which is not a passing grade in graduate school. This thing will now invite the worst kind of mud wrestling in DC. We could have done so much better if Obama had been willing to be real about what went wrong and what needs fixing. There were some good points, particularly about too big to fail and over-the-counter derivatives trading. But most of the good ideas are presented vaguely, and are surrounded by bad ideas and huge omissions. Important problems and remedies, such as U.S. housing policies that subsidized leverage and regulatory rules that mis-measure risk, are ignored completely or mentioned in passing. Too much weight is attached to populist objectives. And the huge reallocation of power toward the Fed is inadvisable. –Charles Calomiris, Columbia University Business School
* In seeking to undo the damage inflicted over the past decade by misguided government policies, the sweeping financial regulatory reform announced today by the Obama Administration will simply ensure that the current destitution of the American financial services industry will become permanent. As was the case with the deeply flawed Sarbanes-Oxley legislation of 2002, this move will further burden U.S. industry with unnecessary regulation that will decrease our ability to compete globally. –Peter Schiff, Euro Pacific Capital
* Cheers for the extension of regulation, including capital requirements, to all “Tier 1 FHCs” — which, in the report’s jargon, means any financial institution, whether or not it’s a conventional bank, that might have to be rescued in a crisis. –Paul Krugman, Princeton-NY Times
(Continued here.)
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