Inside the Paulson Plan
Will overhauling the financial system work?
Treasury Secretary Henry Paulson's proposed sweep of financial regulation would emphasize more control at the federal level, at the expense of state oversight, and consolidate an alphabet soup of existing agencies.
It is an idea that has been kicking around for a while, and one that is bound to provoke heated debate on Capitol Hill and among the various banking and market oversight agencies, which are already tripping over each others' turf. It is also bound to please some circles of Wall Street because the plan, while strengthening the Federal Reserve's role over certain aspects of the markets, like risk taking, would also emphasize greater self-regulation over other aspects, including business conduct.
Paulson's plan is a recognition that Wall Street has pushed beyond regulators' abilities to keep up with innovation. Asset securitization and other structured finance activities, where the credit crisis was created, didn't exist at the time the federal banking agencies were established decades ago. And since the repeal of Depression-era laws separating risky brokerage activities from consumer deposit safeguarding, Wall Street and major commercial banks have increasingly been competing in trading, stock and bond underwriting, and other risk-taking activities.
Even the markets have morphed. The major U.S. stock exchanges have moved into trading options and bonds and have gone across the Atlantic to merge with major European exchanges. Futures trading is their next ambition. Meanwhile, the major U.S. futures exchanges have been merging, giving rise to electronic trading networks and plans by the big Wall Street firms to set up rival markets.
Wall Street's main lobby group, the Securities Industry and Financial Markets Association, embraced Paulson's proposals. "Our present regulatory framework was born of Depression-era events and is not well suited for today's environment where billions of dollars race across the globe with the click of a mouse," said Tim Ryan, chief executive of the association. "That fact, teamed with the current market conditions, result in an universal agreement that it is time to modernize and revitalize the current system."
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Member Comments
Posted By: sivere @ 04/06/2008 3:38:16 PM
Comment: The Paulson plan is window dressing. It is the Congress who has the authority to create and regulate the currency and credit, not the Executinve (Treausry); though clearly the treasury enforces the rules.
Look, we (the taxpayer) are going to pay for whatever mess the banks get themselves into, all ni the name of "stability". We have the resopnsibility. The constitution also gives us the authority (through our representatives). We need congress to retake the Fed and reorganize/replace or otherwise develop a better more accountable system. Please see "TakeBackTheFed.com".
Posted By: Texas Jake @ 04/01/2008 2:07:43 PM
Comment: I saw GWBush throw the first pitch in baseball on youtube to a stadium full of intense boos. He just smiled and waved like it was actually cheers. It is a typical glimpse of his approach to our countrys problems. I hate that glassy-eyed geezer. He's not hurting for grocery money; why should he care that we are? Helpless and hopeless... not the America I want for my kids. Oh yeah, voting only hurts because it gives the illusion people can make changes... all it does is move the clock down the road a ways... pfffft
Posted By: vznuri @ 03/31/2008 9:03:26 PM
Comment: talk about making a deal with the devil...
"fractional reserve banking as economic parasitism"
http://econpapers.repec.org/paper/wpawuwpma/0203005.htm
endorsed by two phd economists. printed in nexus
magazine, 60k world circulation. #1 top downloaded
economics paper. used by economics
teacher in australia as standard classroom material.
more info on request.
recent supporting material:
The Shock Doctrine: Naomi Klein on the Rise of Disaster Capitalism
http://www.democracynow.org/article.pl?sid=07/09/17/1411235
Confessions of an Economic Hit Man: How the U.S. Uses Globalization to Cheat Poor Countries Out of Trillions
http://www.democracynow.org/article.pl?sid=04/11/09/1526251
John Perkins on "The Secret History of the American Empire: Economic Hit Men, Jackals, and the Truth about Global Corruption"
http://www.democracynow.org/article.pl?sid=07/06/05/149254
Video, senator/pres candidate Dennis Kucinich
at last years 2005 Monetary Reform Conference
http://www.monetary.org/video/kucinich/win_broadband.wmv
Money as Debt, video by Grignon
http://video.google.com/videoplay?docid=-9050474362583451279