U.S. seeks enhanced financial authority for Fed

Source: Reuters via Yahoo

The U.S. Treasury Department will propose on Monday that the Federal Reserve be given sweeping new powers that would make it chief regulator with authority to require actions to ensure market stability.
An executive summary of the proposals published by the New York Times, which Treasury Secretary Henry Paulson will make public on Monday when he unveils a blueprint for regulatory overhaul, says it is vital to fix "regulatory gaps and redundancies" exposed by an ongoing subprime mortgage crisis...The proposals say a "market stability regulator" is needed and the Fed best fits that role, suggesting the central bank could use its control over interest rates as well as its ability to provide market liquidity to fulfill its functions.

It proposes that the Fed be given broad authority to require information from all participants in financial markets and a right to collaborate with other regulators in writing the rules that companies and institutions must follow. If the Fed finds that the actions of some market participants pose risks for the overall financial system or the economy, "the Federal Reserve should have authority to require corrective action to address current risks or to constrain future risk-taking," the summary said.
Among other recommendations, Treasury suggests merging the Securities and Exchange Commission, the U.S. markets watchdog, with the Commodity Futures Trading Commission that oversees the activities of the futures market...It also recommends getting rid of a Depression-era charter for thrifts that was intended to make it easier to obtain mortgage loans, saying it is no longer necessary. That would mean closing up the Office of Thrift Supervision and transferring its duties to the Office of the Comptroller of the Currency that oversees national banks.

Treasury said it has been working on its proposals since March last year, well before calls for an overhaul began to intensify in the wake of the subprime mortgage crisis that began to wreak havoc last summer on financial markets. Paulson had signaled some of the direction the proposals would take earlier this week when he said that since the Fed had taken the exceptional step of permitting investment banks access to its discount window for loans -- the first time it has done so for any financial entities besides commercial banks since the 1930s -- it should have some authority over the investment banks...
Another proposal would provide an option for insurance companies to obtain a charter to do business under federal regulation, though it says the current state-based system would continue for any that did not get a federal charter. Most of the financial services industry in the United States is regulated by federal authorities except insurance, which the states supervise. For years, big insurance companies, however, have been calling for an optional federal charter...

Many analysts and some Treasury officials have said they don't expect recommendations made during the current administration to become law but hope it will be used a springboard for the next resident of the White House.

(Reporting by John Poirier and Glenn Somerville; Editing by Louise Heavens)



Read more: http://news.yahoo.com/s/nm/20080329/bs_nm/usa_economy_regulation_dc_4

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Such a scheme wouldn't have stopped any of the institutions that started this crisis in the first place, so it's more window dressing and/or power grab than a solution.

The solution would be to reinstate all the regulation that came out of the Great Depression and protected the economy and the people, until Reagan started the process of undoing it all!

Thanks, that you reported the story
But I think even the news outlets
don't even understand the implications yet.


They broke the law with the $100 billion payout
to a fricking INVESTMENT FIRM.......not a bank today

so they tend to ignore them.

"So move along. There is nothing to see here. You can rest easy knowing that the FED loves you, and will take care of you. Smirk."

- republicon-borg corporate media dumplets

the tax payers can expect what value or service?

Under the bushc - there is now a complete disconnect between the idea that taxpayer dollars should be spent to the benefit of tax payers.

Deal we got REA, CCCamp projects which we still use, hydroelectric damns, and much more. What are we the people getting out of any of the last 8 years of governance?

If the Democrats gave two shits about the country they would fight this until the last dog died. But they'll allow it.

We are all fucked.

It's interesting if you look at it from the context of having a class about Marxism last year and then applying the concepts of distribution of capital, wealth and such to include government intervention in the market. I think this is one case or another that the US has just given into every whim of the bankers. Oh I just also realized that the federal reserve is only as governmental as federal express - they hint at it in here; "risk taking...future risks"

Is that why there was variable interest loans to reward them for taking a risk? Interesting that it's done with a compounding interest rates i.e what you can sell your self for. Some how it's justified to make money off of the would be home debaters and that in taking that risk the bankers ought to make money for even bothering.

I wonder what the completive nature of capitalism will have to bring about in this segment in the human story.

Shouldn't the Treasury be working on regulations and reform, not the Fed?

In these days of privatization and outsourcing, you get what you deserve by some corporate greedy model, not what you need, and not what you paid for, either.

:scared:

FACTBOX: Treasury proposals for regulatory overhaul



here's what the "Working Group" aka PPT (Plunge Protection Team) sprang from:

Executive Order 12631--Working Group on Financial Markets

Source: The provisions of Executive Order 12631 of Mar. 18, 1988, appear at 53 FR 9421, 3 CFR, 1988 Comp., p. 559, unless otherwise noted.

By virtue of the authority vested in me as President by the Constitution and laws of the United States of America, and in order to establish a Working Group on Financial Markets, it is hereby ordered as follows:
Section 1. Establishment. (a) There is hereby established a Working Group on Financial Markets (Working Group). The Working Group shall be composed of:
(1) the Secretary of the Treasury, or his designee;
(2) the Chairman of the Board of Governors of the Federal Reserve System, or his designee;
(3) the Chairman of the Securities and Exchange Commission, or his designee; and
(4) the Chairman of the Commodity Futures Trading Commission, or her designee.
(b) The Secretary of the Treasury, or his designee, shall be the Chairman of the Working Group.
Sec. 2. Purposes and Functions. (a) Recognizing the goals of enhancing the integrity, efficiency, orderliness, and competitiveness of our Nation's financial markets and maintaining investor confidence, the Working Group shall identify and consider:
(1) the major issues raised by the numerous studies on the events in the financial markets surrounding October 19, 1987, and any of those recommendations that have the potential to achieve the goals noted above; and
(2) the actions, including governmental actions under existing laws and regulations (such as policy coordination and contingency planning), that are appropriate to carry out these recommendations.
(b) The Working Group shall consult, as appropriate, with representatives of the various exchanges, clearinghouses, self-regulatory bodies, and with major market participants to determine private sector solutions wherever possible.
(c) The Working Group shall report to the President initially within 60 days (and periodically thereafter) on its progress and, if appropriate, its views on any recommended legislative changes.

Sec. 3. Administration. (a) The heads of Executive departments, agencies, and independent instrumentalities shall, to the extent permitted by law, provide the Working Group such information as it may require for the purpose of carrying out this Order.
(b) Members of the Working Group shall serve without additional compensation for their work on the Working Group.
(c) To the extent permitted by law and subject to the availability of funds therefore, the Department of the Treasury shall provide the Working Group with such administrative and support services as may be necessary for the performance of its functions.

here's an article that gives a glimpse of what TPTB and the PPT did after 9/11

Preventing the 'plunge'

A high-level committee behind the scenes fought against market meltdown

The dramatic drop in the markets last week could have been much worse if it hadn't been for a shadowy committee of some of the biggest names in banking.

Analysts say the Working Group on Financial Markets, nicknamed the 'Plunge Protection Team', was extremely successful in helping co-ordinate a response across the markets when they reopened last Monday.

The team was set up in the late Eighties by Ronald Reagan and came into its own in 1998 when it drew up an emergency response in the wake of the collapse of the giant hedge fund, Long Term Capital Management. In the past it has comprised Fed Chairman Alan Greenspan, US Treasury Secretary Paul O'Neill, the heads of the various US stock exchanges and the bosses of a handful of leading investment banks.

However, this time around no fewer than 35 individuals - including representatives of other central banks - are thought to have been in the team.

The challenge was to agree on how to react to the events. Harmony was in danger of being jeopardised when the members representing investment banks clashed with those representing the stock exchanges, who wanted an early resumption to trading. The banks, for their parts, were concerned that staff and infrastructure were too battered to resume in the same week as the attacks.

...more...

RESIST!!!:mad:

You will be assimilated.

Run while you can! Apply for polical asylum! (and don't forget to convert your $$$ to euros first...)

There has been too much privatization and deregulation.

Here that sound? It's the sound of the free market balloon deflating. What gets me is that all those brilliant minds in Wall Street never anticipated that greed would get in the way of a fair free market process, or worse, that they thought greed was a good human motivator to make free market work.

Now, either they were wilfully stupid, or just good con men?

There never were, not since 1913. And this just makes sure that there won't ever be.

Isn't the Federal Reserve a private bank? In which case, giving them more power isn't exactly like government regulation of the markets, is it?

Going from benign neglect by the government right into crony politics--rewarding the foxes with the henhouse.

... responding to a crisis with the worst possible proposal.

The FED (Alan Idiot Greenspan) is largely responsible for this mess. The SEC also, but the FED was the facilitator, dumping billions into the economy in the form of housing loans.

Well, now all that can be done (or I should say all they are going to do) is print billions to bail out all of the bad actors.

The taxpayers will foot the bill in the form of an even weaker dollar and high inflation.

As usual, it is heads they win, tails we lose.

That's exactly what this Admin has been doing, not just this time but with every government function.

"The solution would be to reinstate all the regulation that came out of the Great Depression and protected the economy and the people, until Reagan started the process of undoing it all!"

This is EXACTLY what I yelled at my monitor when I read the story on a news site this morning.

Reinstate ALL the laws that were summarily tossed aside over the past 25+ years. Why friggin' reinvent the wheel? They HAVE the text of this legislation. Repeal the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (which thanks to this, my primary bank that was originally established in the 1700s, is now on its 3rd out-of-state corporate owner) and reinstate and modernize the Glass-Steagall Act. Keep the commercial consumer banking the hell away from the speculative investment banking.

Instead of giving the Fed more we should be abolishing it.

It is simply amassing how brazen bush&co are. Right in the mist of an economic collapse basically orchestrated by the Fed he announces rewarding them for their failure.

Reminds me of Brenner and Tenet getting a Medal of Freedom for their screw-ups. This is truly an Alice in Wonderland administration.

If Bernake needs to look at the banks books, give him TEMPORY power. three months is all he needs. I hope the Dems don't fall for this. Look at the homeland security diaster. All they were suppose to do was exchange info between the intel agencies. Now they've become a monster. NO MORE!!!!!!!

They used to be effective, before they were defunded, etc.

And no one in our "free press" giving challenge to the whole Fed vs Treasury question . . .

Let's get the printing of money back to the Treasury ---

and start making clear that we don't want a Fed interfering in matters of economic democracy!!

Wake up America!

let em say regulations are bad.

by giving away their fiduciary responsibilities - the lot of them - executive, legislative, and judicial.

http://www.youtube.com/watch?v=utRKKOUHA4A

Some part of what CNN reported about this made me think that's at least part of what the Repub plan is about.

Every time I think I can't get any more frustrated w/ this Nazi Regime, they slink out of their scales and do something else even more heinous. Evil. Underhanded. I'm out of words. The fed is the biggest rip off in the history of this country--AND THEY'RE GIVING IT MORE POWER? Well, damn, here's my wallet, and the keys to everything why don't you greedy bastards just go on in and take everything. They won't be happy until everybody else is dead, and then they'll all look at each other and say, "Gollee, Dick, remember the good ol' days?" And Dick will have his fourty-seventh heart attack and offer W a drink. Please someone stop these pricks!!!!! :rant:

Source: FT





Read more: http://www.ft.com/cms/s/0/cf318dc6-fdce-11dc-8785-000077b07658.html?nclick_check=1

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OK...

We are going to try something new? A "principles-based" "self-regulation" system that excludes Goldman and Lynch.

Do I need more kool-aid to understand this?

They are turning the management of our money over to an independent, unregulated, agency not even mentioned in the Constitution. A group of handpicked, unelected elitists want to regulate our finances. There is a reason our founding fathers put funding in the Congress and NOT in the Executive branch.