Obama Set to Announce Wall Street Regulatory Overhaul
In an effort to prevent some of the events that led to the financial crisis in the future, the White House will unveil a sweeping overhaul of the nation's financial regulatory system tomorrow. Suck it Wall Street!
The plan is an attempt to overhaul an outdated system of financial regulations, according to senior administration officials.
The administration's plan leans heavily on the Fed, expanding its role as the regulator of the nation's largest banks such as J.P. Morgan Chase and Goldman Sachs to include other giant financial firms, such as the insurance companies American International Group and MetLife. The agency, which has greater independence from the political process than other regulators, would have broad authority to impose special requirements on those companies, such as mandating that they set aside a larger percentage of their assets against possible losses than smaller firms. Such a requirement could limit large companies' appetite for risk, but also their profit and growth.
A second element likely to provoke fierce debate is the establishment of a Consumer Financial Protection Agency.
The proposed Consumer Financial Protection Agency would have broad authority to regulate the relationship between financial companies and consumers of mortgage loans, credit cards, checking accounts and other financial products. It would define standards, police compliance and penalize delinquent firms. Other agencies, particularly the Federal Reserve, would surrender some powers.
The agency would have authority to overhaul a tangled mess of federal regulations that many financial experts regard as outdated, insufficient and inadequately enforced. An oft-cited example is the massive stack of paperwork handed to mortgage borrowers at closing, including several calculations of the true cost of the loan itself.
In the already famous fly-swatting interview from earlier today, Obama explained that these efforts mirror some of the steps taken after the Great Depression to prevent further economic catastrophes, many of which were repealed during the deregulation frenzy in the late nineties and early aughts.
So yes, new rules for Wall Street! Or, as some conservative talking heads will call it—Communism! We have a hunch that the market will be tanking tomorrow.
