Posted by Kenneth Anderson:
Financial Regulatory Overhaul
http://volokh.com/archives/archive_2009_06_07-2009_06_13.shtml#1244554592
to be pared back? As fault lines emerge among private and public
players? Two good articles today on the pace and direction of the
regulatory reform of financial services and financial markets. I'm
light-blogging the next couple of days, as I'm traveling to Palo Alto
for a meeting of the Hoover Task Force on National Security and Law,
and so mostly thinking about things like counterterrorism, direct part
in hostilities, predators and targeted killing ... but these are
articles are timely, well-reported, and useful to those of us keeping
track of regulatory reform.
The first, by [1]Zacharay Goldfarb in the Washington Post, Tuesday,
June 9, 2009, gives an excellent overview of the "fault lines"
developing over the direction of financial services overhaul. The
result of the lobbying battles is
likely to shape how much profit banks will make, who can get a
mortgage, which federal regulators oversee different corners of the
economy -- and, ideally, whether the government is prepared for
future financial threats.
With so much money and power on the line, interests inside the
government and out are not waiting for the administration to reveal
its plan, which sources say will be detailed next week. Lobbyists
for financial firms and consumer activists, among others, have been
meeting privately with the Treasury Department and the White House
to press their views, according to people briefed on the
discussions.
So who is on what side of what? What are the fault lines that are
forming - fluid, as Goldfarb notes - but coalitions joining and
shifting:
-- Financial firms, for instance, have closed ranks in vigorously
opposing a proposal for how mortgage lending, credit cards and
mutual funds will be regulated.
-- Big banks are squaring off against smaller ones over proposals
for consolidating regulatory powers in a few agencies.
-- Banks and hedge funds find themselves on opposite sides in the
debate over how to regulate the trading of derivatives, an exotic
financial instrument that aggravated the financial crisis.
-- And government agencies, jealous of one another's existing
powers and prestige, are also clashing over plans to redistribute
their authority.
The article walks, offering very useful interviews, through each of
these categories. The second article is from the Tuesday, June 9,
2009, Wall Street Journal, and the front page headlines is quite
categorical: [2]"Finance Reforms Pared Back." It offers the case that
the "Obama administration is backing away from seeking a major
reduction in the number of agencies overseeing financial markets ...
[according to sources] the current alphabet -soup of regulators will
remain mostly intact."
My feelings about this are very mixed, for all the usual reasons of
trying to regulate a system that shares hugely important features as a
system (as in, systemic risk) but also has many apples and oranges and
kiwis and star fruit, too. The former argues for a single overarching
regulator; the latter, for the alphabet-soup. That's all I can say
now, but the articles are well worth reading.
References
1.
http://www.washingtonpost.com/wp-dyn/content/article/2009/06/08/AR2009060803972.html?nav=rss_business/industries
2. http://online.wsj.com/article/SB124451579977696939.html#mod=testMod
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