Secretary Geithner delivered prepared remarks to the House Financial Services Committee today. He outlined broad goals for financial reform that the administration would like to see in the bill:
In his opening remarks, Mr. Geithner laid out three baseline goals for financial reform.
He said any new laws must offer substantial new protections to consumers and investors, make the financial system less vulnerable to crisis, and protect taxpayers from having to bail out future crises.
The Senate's version of reform would call for more consolidation of all the current government regulators. There are already 10 agency's that are supposed to regulate Wall Street. But they have the same mandate, and are supposed to regulate different areas of the same sector which makes their jobs confusing and hard to do. Consolidating all the regulators is key to having effective regulation, and no, there is no need for a new one that sounds nice (Consumer Financial Protection Agency).
I would also like to see Congress pass reforms that make the market place more open. If you think health care is confusing, Wall St. changes its rules every single day. There have been plenty of articles written about the practices that have taken place in the last decade to know that no one was watching the controls. It became extremely hard to as everthing became so fast. The best way to hold those who work in the financial sector responsible is to make sure we understand what they are doing.
Giving the Federal Reserve more power to regulate financial institutions is a good idea. It is already seen as the main regulator of the economy and will be able to get the resources needed to effectively regulate the sector. In fact, they are already a Consumer Protection Agency.
We all know, and have now seen, what laps federal regulation of the market can do. So while the administration is proposing something that may sound nice, it's more important that they propose something that works.
Update: I was right.