New potential regulatory structure to be unveiled this week:
President Barack Obama is expected Wednesday to propose the most sweeping reorganization of financial-market supervision since the 1930s, a revamp that would touch almost every corner of banking from how mortgages are underwritten to the way exotic financial instruments are traded.
At the center of the plan, which administration officials are referring to as a “white paper,” is a move to remake powers of the Federal Reserve to oversee the biggest financial players, give the government the power to unwind and break up systemically important companies — much like the Federal Deposit Insurance Corp. does with failed banks — and create a new regulator for consumer-oriented financial products, according to people involved in the process.
The plan stops short of the complete consolidation of power that some lawmakers have advocated. For example, it will allow several agencies to continue supervising banks. It also won’t place specific limits on the size or scope of financial institutions, but it will make it much harder for large companies to be so overleveraged that they threaten the broader economy.
If you thought the screaming over the non-TARP Chrysler lenders was loud, I’m imagining this will provoke the mother of all hissy fits. Sadly, I didn’t see anything in the WSJ write-up that seemed to address the role the ratings agencies played in this current disaster.
Those of you who understand this stuff, what do you make of the report?