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American Financial Regulatory Reform Announced

The New York Times published
the detailed proposals for Regulatory Reform for all American financial
markets, from the Treasury on Saturday.  The aim is to:

  • consolidate
    all the regulations and authorities for everything from banking to
    hedge funds and private equity into three powerful overseers: a new
    Prudential Financial Regulator, the Federal Reserve and the SEC
    (currently there are five);
  • merge the SEC with the Commodity
    Futures Trading Commission, and reduce the powers of the SEC by giving
    the Federal Reserve overall authority for the financial markets;
  • eliminate the difference between ‘banks’ and ‘thrifts’, and close down the Office of Thrift Supervision;
  • create a national regulator for insurance firms, eliminating the powers of state authorities over insurers;
  • avoid any new regulations being introduced, but ensure regulatory authorities exert and implement their authority; and
  • give
    the Federal Reserve the power to swoop into any part of the industry at
    any time to perform spot checks, including detailed examination of
    internal bookkeeping for any institution that they consider could pose
    a risk to the overall financial system.

The last bit is
quite radical, as the Fed had no power to do this before, and there is
expected to be a long and protracted debate between Democrats and
Republicans, Congress and the Senate, before this passes into law in
2009.

The full text of the Executive Summary is available here.   

Reuters
also reports that the US and UK have agreed a joint banking watchdog,
comprising senior treasury and regulatory figures from London and
Washington, to develop proposals to monitor and regulate the banking
system.

About Chris M Skinner

Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, the Finanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here...

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