It's often been said that we're in the worst financial crisis since the 1930s. So perhaps its no surprise that we seem on the verge of the biggest financial regulatory overhaul since the Great Depression. But we certainly didn't expect anything this sweeping to come out of the Bush administration. We clearly underestimated these guys. Talk about shock and awe.
But we're getting ahead of ourselves. Over the weekend Treasury Secretary Hank Paulson released the outline of his controversial and sweeping a plan to overhaul financial regulation. He would eliminate thed SEC, FDIC, CFTC, OTS and OCC. And after dumping out this bowl of alphabet soup, he would fill it right back up again with the Prudential Financial Regulatory Agency , the Conduct of Business Regulatory Agency, the Federal Insurance Guarantee Corporation and the Corporate Finance Regulator. It's going to take some time to digest these changes.
Later this morning, Paulson will give a speech about this plan. In the meantime, the plan is already coming under criticism. Barney Frank worries that the plan may take too much power away from states, particularly (from what we've been lead to understand) in the area of regulating insurance. Larry Ribstein worries that the new, more concentrated structure of regulation could result in losing significant flexibility in financial innovation.
"On this latter point, consider that the CFTC's replacement, CBRA is likely to be less accommodating," Ribstein writes. He adds that "with one regulatory agency we’re likely to get fewer new financial products."
We're going to hold back for now, as we attempt to work through what's known about the plan. Let's see what Paulson has to say. More later today.
Paulson Plan Begins Battle Over How To Police Market
Paulson's big bang [Ideoblog]
Posted by guest , Mar 31, 2008 9:54AM
Um, April Fool's Day isn't until tommorow.
Posted by guest , Mar 31, 2008 9:55AM
Wait, this is real?
Posted by John Carney , Mar 31, 2008 10:11AM
Paulson speaking on it now. Doesn't look like he's joking.
Posted by guest , Mar 31, 2008 10:18AM
This whole thing is looking like it was planned from the get go. Especially the whole "let's get rid of any evidence by eliminating ANY regulatory bodies". Oh and while we are at it let's give complete authority to a group of shadow bankers who feel the need to conduct ALL it's business in private and refuse to release ANY notes or tell us who EXACTLY is attending those meetings...
Effing brilliant......How much you want to bet this is the start of not having ANY elections. Wait for the "national emoergency" to be called because of the "liquidity issues" that happens to coincide with the pending removal of these people from power.
Totally disgusting and if this does not get people up and out to protest then nothing will.
Posted by guest , Mar 31, 2008 10:32AM
its a job creation cycle for annally retentive job prevention officers, aka compliance and regulatory, no doubt with the backing of every law firm on the street who will make a killing advising on any regulatory changes.
shame theyre not listed... i'd be sooo long law now...
Posted by ab , Mar 31, 2008 10:33AM
Has anybody considered the effect these changes might have on the Fed's independence? If we give the Fed much more responsibility to regulate and oversee "market stability" aren't we giving lawmakers more reason/opportunity to meddle more with the Fed's main function of setting monetary policy (I was going to say fighting inflation, but c'mon now, that's not really it any more)?
Posted by guest , Mar 31, 2008 10:34AM
Is it time to break out 1984 again?
Posted by guest , Mar 31, 2008 10:38AM
@10:32 - us 'job prevention officers' are the only things keeping your ass out of jail.
Posted by guest , Mar 31, 2008 10:45AM
This sucks. Can we get back to talking about Eliot Spitzer and Seth Tobias please? I'll even take a Holocaust joke. Please?
Posted by guest , Mar 31, 2008 10:52AM
fuck me... compliance officers (see 10.38) read db???
eeeks
Posted by John Carney , Mar 31, 2008 11:02AM
Ab,
That's a good and important point. More authority clearly will lead to more pressure from the regulated.
Posted by guest , Mar 31, 2008 11:17AM
Okay.
Q: What's the difference between a Jew and a pizza?
sincerely,
a jew.
Posted by guest , Mar 31, 2008 11:22AM
The Regulatory Oversight Commission is dead! Long live the Commission for Regulatory Oversight!
Posted by guest , Mar 31, 2008 12:02PM
@10:52 - compliance is part of what I do (people at small firms often have to double-up on duties); it is a thankless and dreary job - you get blamed if anything goes wrong, you get none of the credit, and you have to deal with ignorant young shits (like 10:32 above) who think they have a right to do as they please.
Posted by guest , Mar 31, 2008 1:05PM
Main Street thinks we've had enough innovation from Wall St for awhile. You fucking goons did this to yourselves.
Too many hedge funds and too many private equities...unregulated, black-box innovations, structured to serve only the innovators...and to fuck all the bag holders.
You know the two old sayings..."After innovation comes regulation" and "The more you tax something, the less of it you get"? Well, now we'll have an opportunity to regulate the hell out of them and to tax the shit out of them. Eventually, we'll have less (fewer) of them and of their style of innovation.
A third old saying..."Every great fortune is founded on a crime"... With that in mind, how's this for an innovative progression? "Fleeced Investors", Quanted-Up Bubble", "Sell Short", "All Get Rich". (I extracted these 4 points from a brilliant entry by another guest poster, and he deserves the credit for them).
I do wonder how our financial system ever did survive in the past without the likes of Steve Schwarzman and Pete Peterson?
Another thing...A few days back, some clown poster accused me of being oblivious to the grease that Wall St actually applies to a system that affects my personal life in so many ways and that I don't have a clue about. Well, the only "grease" I've noticed on Wall St lately is the grease lining the pockets of the innovators and the grease lining the tubes that the financial system is sliding down.
@10:32AM...As for all those lawyers, they don't know a damn thing more about these new regulations at this point than the rest of us do. The Wall St innovators would be better off taking this opportunity to have their own, in-house legal goons learn something new for a change. Maybe they could save themselves some coin in the process. They'll need it to pay those new taxes.
Finally, while I'm on a roll, I thought I'd get on somebody's case...That fat guy with the jowls who runs Lazard. He advised Carlyle Capital Corp and Bear Stearns. Where did it get them? Harvard Business and Harvard Law. What a waste of skin he is.
-The Guy from Delaware