Administration set to unveil new regulatory policy
June 16, 2009 by Personal Liberty News Desk
President Obama will deliver a speech on Wednesday in which he is expected to announce a plan for a sweeping overhaul of the financial system regulation.
According to a preview offered yesterday by Treasury Secretary Timothy Geithner and Lawrence Summers, director of the National Economic Council, the plan will call for greater oversight powers for the Federal Reserve and stricter restrictions on complex financial products.
Specifically, the reform envisions the creation of a council of regulators responsible for coordination across the financial system.
It will also require institutions which sell asset-backed securities to retain a 5 percent stake in the loans in an effort to discourage risky lending practices.
"Considerations of stability, safety and systemic risk have to loom larger in the planning, thinking, and strategizing of every financial institution going forward than they have in the past," Summers said in a speech on Friday, quoted by the Wall Street Journal.
Critics of the proposal have said the Fed is already overextended and the plans lack provisions for regulating the insurance industry, according to the Associated Press.
Others have pointed out it fails to create a single regulator, leaving the job to a patchwork of local and state-level agencies which often encroach upon one another’s jurisdiction.