Change it, rearrange it
Why has America’s economy gone down the tubes? Why is it taking so long for it to crawl its way up and out of the porcelain bowl? There are many ways to answer these questions, but most will tell you that a lack of oversight and unwise risk taking have played key roles in the brush fire. Individuals can monitor their finances during tough times with a little bit of help from fast cash payday loans in Sacramento, but on the corporate and government levels, something bigger is needed.
That’s why President Obama is set to unveil “sweeping overhaul” of financial oversight in America. He thinks it’s high time a broken system was made right.
“A failure of a system”
Robert Schmidt reports for Bloomberg that Obama has said his plan to “refashion supervision of the U.S. financial system” is necessary to close gaping holes in the way oversight and risk taking have been managed. His proposal is considered “the biggest overhaul of market rules in more than seven decades,” writes Schmidt. Just one of many significant elements of the change would include a new regulatory board specifically for the biggest companies in America. Obama’s plan also includes the creation of an agency for monitoring consumer financial products, nominating the Federal Reserve as the watchman of companies who “are too big to fail” and a federal group to monitor private equity funds more tightly.
“This was a failure of the entire system,” Obama said. “An absence of oversight engendered systematic, and systemic, abuse.”
Obama would like this legislation ready for his signature by the end of 2009. However, he’s expecting there to be numerous political battles along the way.
The more things change…
Only the Office of Thrift Supervision would get the ax. Much of the current financial regulatory system would remain in place, which President Obama sees as a possible aid to getting future legislation passed, without the political turmoil a full shake-up could bring. However, Obama’s plan does state that “More can and should be done in the future. We focus here on what is essential: to address the causes of the current crisis, to create a more stable financial system that is fair for consumers and to help prevent and contain potential crises in the future.”
Just in time for the new Credit Card Bill of Rights and the cry for sweeping mortgage reform, a new Consumer Financial Protection Agency (CFPA) would monitor those agencies, ever on the lookout for “unfair terms and practices.” The CFPA would have the authority to ban bad practices and punish companies for violations with fines and penalties. It would also be able to raise the standards for banks and non-banks, something which is definitely needed.
Giving the Fed more authority
This prospect scares many who feel the Fed shouldn’t have the control over monetary policy that it already does, but President Obama is committed to giving them more oversight authority. The central bank would oversee all “risky” financial firms. What happened with Bear Stearns and Lehman last year cannot be repeated if America’s economy is to survive, so Obama is proposing that the Fed monitor banks and large financial companies. This includes insurers like AIG and hedge funds, which the current system allowed to run rampant with their financial shenanigans.
“These firms should not be able to escape oversight of their risky activities by manipulating their legal structure,” reads the White Paper report. “Our proposals would compel these firms to internalize the costs they could impose on society in the event of failure.”
Calls for emergency funding will not be filled with the near-automatic speed, which could offer Fed bashers some relief. Obama’s plan will curb some of their emergency lending power. Treasury Secretary Timothy Geithner would be required under the new plan to approve in writing any corporate requests for emergency money, which should streamline the process and (hopefully) weed out bad decisions. In addition to this responsibility, Geithner and the Treasury will be able to propose changes to the Fed’s structure in the interests of improving the central bank’s accountability.
Curing the sickness
I hope that we’ll be able to cure the sickness in America’s financial system soon. The quicker change is allowed to take place, the closer we’ll be to a system that doesn’t feed the rich at the expense of the middling poor. This oversight – this transparency – won’t mean fast cash right away, but a system that works for more of the people more of the time is a good thing. We need this sweeping overhaul. On a personal level, I would be able to make investments that help my bottom line. payday loans in Sacramento for those little emergencies will still be there, but the health of the whole will be welcome.
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