President Obama will lay out a comprehensive financial regulatory reform plan this afternoon:
From Treasury Dept: The President will be joined by Treasury Secretary Tim Geithner, representatives from the regulatory community, consumer groups, the financial industry and members of Congress for an event in the East Room later this afternoon.
The President’s plan will:
» Require that all financial firms that pose a significant risk to the financial system at large are subjected to strong consolidated supervision and regulation.
» Increase market discipline and transparency to make our markets strong enough to withstand system-wide stress and the potential failure of one or more large financial institutions.
» Rebuild trust in our markets by creating the Consumer Financial Protection Agency to focus exclusively on protecting consumers in credit, savings, and payment markets.
» Provide the government with the tools needed to manage financial crises so it is not forced to choose between bailouts and financial collapse.
» Raise international regulatory standards and improve international coordination.
Some excerpts from White Paper: Financial Regulatory Reform:
We propose the creation of a Financial Services Oversight Council to facilitate information sharing and coordination, identify emerging risks, advise the Federal Reserve on the identification of firms whose failure could pose a threat to financial stability due to their combination of size, leverage, and interconnectedness (hereafter referred to as a Tier 1 FHC), and provide a forum for discussion of cross-cutting issues among regulators.
The Council should replace the President’s Working Group on Financial Markets and
have additional authorities and responsibilities with respect to systemic risk and
coordination of financial regulation.
Any financial firm whose combination of size, leverage, and interconnectedness could pose a threat to financial stability if it failed (Tier 1 FHC) should be subject to robust consolidated supervision and regulation, regardless of whether the firm owns an insured depository institution.
Capital and management requirements for FHC status should not be limited
to the subsidiary depository institution. All FHCs should be required to
meet the capital and management requirements on a consolidated basis as
We propose the creation of a new federal government agency, the National
Bank Supervisor (NBS), to conduct prudential supervision and regulation
of all federally chartered depository institutions, and all federal branches
and agencies of foreign banks.