US plans finance system overhaul

[Ret10Echo]

FRB looking to get stronger....



OH...and if you wonder what exactly they do here is a start point:

http://www.federalreserve.gov/pubs/frseries/frseri.htm



US plans finance system overhaul The US Treasury is set to reveal its blueprint for the biggest overhaul of regulation of the financial sector since the 1930s.

Critics have said that the credit crunch and resultant market turmoil made a strong case for change.

But Treasury Secretary Henry Paulson is expected to reject claims that existing regulations have led to the turmoil.

The government says the proposals are an effort help US firms become more competitive in the global economy.

"Despite the fact that there will be a temptation to view this through a lens of what is happening now in credit markets, this has been a process that has been going on for a year," said Treasury Assistant Secretary David Nason.

"These are very complex issues that require a serious amount of debate."

New powers

The plans are expected to propose giving sweeping powers to the Federal Reserve - enabling it to tackle the kind of turmoil that is currently hitting financial markets.

Under the proposals, the Fed would become "market stability regulator" - allowing it to examine the books of any financial institution deemed to potentially threaten the stability of the financial system.
It is also expected that the overhaul will see a new organisation set up to take over the role of the five separate banking regulators.

A body to regulate business conduct and consumer protection is also likely to be proposed.

Among other measures expected is the creation of a commission to establish stricter criteria for firms involved in the mortgage market.

The review into the sector began early in 2007 after the financial services industry complained that over-regulation from Washington meant US firms were not as globally competitive as they could be.

Before travelling to Europe, President George W Bush said that he wanted congress to pass several pieces of legislation which he saw as "vital priorities".

These included housing law which would enable more homeowners who were battling to meet mortgage payments to refinance their loans.

Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/h...ss/7322107.stm

[rubberneck]

I think this is a monumentally stupid idea. Some how the American people have gotten it into their thick skulls that they are entitled to free markets that are recession free. You can't have one without the other.

I understand the recessions suck. When I graduated from college in 1991 it took me over a year to find a good job that paid me $18,000. Eight years later I was hiring college kids for entry level jobs that started at $45,000. In the wake of September 11th and the bursting of the tech bubble I found myself unemployed with a new child, unemployed spouse and a brand new mortgage. Trust me I know that recessions hurt but they are also necessary much like forest fires are for clearing the dead wood out of the economy and setting the table for real growth.

Every time that government gets involved they only delay that growth and in many instances prolong the pain. No one wants to see record foreclosures but keeping people in houses that they can clearly no longer afford, and really never could in many instances, is a really poor economic choice and very unhealthy for the country long term. Sadly for us it has become so politically toxic that no politician has the stones to stand up and make that point publicly.

I'd rather take our medicine now and reap the benefits of a rapidly growing economy two years down the road than to see some well intended but half baked, politically motivated, feel good policies drag out the pain for 4 or 5.

[The Reaper]

The economic pain will be over if the Dems win.

The MSM will tell you so.

Through the recovery from the bubble bursting at the end of the Klinton era, for which the Bush Adminstration got no credit, through the boom years of the economy for which the Bush Adminstration got no credit, through the end of the housing bubble (which put trillions of dollars of potential profit in the hands of American homeowners, some admittedly bad risks), for which the Bush Adminstration gets the blame, the media has been reporting negatively on the economy, or, in the best years, ignoring the economy.

Just wait. The Klintons were economic geniuses, and any Dem POTUS will be as well. Just wait for the media to report it.

TR