Looks like our president has reached a new low even for himself lol. He actually wants to give more power to the fed. ROn Paul must be banging his head against the wall by now. http://news.yahoo.com/s/ap/20080329/ap_on_go_ca_st_pe/fed_overhaul By MARTIN CRUTSINGER, AP Economics Writer 1 hour, 58 minutes ago WASHINGTON - The Bush administration is trying to confront the credit crisis that has rattled nerves from Wall Street to Main Street by proposing wholesale changes in how Washington oversees the financial system. A plan set for release Monday would give new powers to the Federal Reserve so that the central bank serves as the system's overarching protector of stability. The proposal would abolish agencies such as the Office of Thrift Supervision and the Commodity Futures Trading Commission, shifting their responsibilities to other federal institutions. When Treasury Secretary Henry Paulson outlines the ideas in a speech, the changes will represent the most sweeping overhaul of financial regulation since the Great Depression of the 1930s. The Associated Press obtained a 22-page executive summary of the proposal. It seeks to make sense of the mishmash of overlapping oversight in which an alphabet-soup roster of agencies regulates banks, thrifts and credit unions. Under the current hodgepodge, institutions that take deposits and are federally insured face multiple regulatory bodies. By contrast, hedge funds, private equity firms and investment banks endure substantially less regulation. The credit crisis that has rocked Wall Street and made credit hard to get on Main Street has highlighted that discrepancy in regulation. Many financial institutions have declared billions of dollars in losses stemming from soaring mortgage defaults caused by prolonged housing troubles. In an unprecedented move designed to get credit flowing again, the Fed is allowing investment banks to borrow directly from the Fed, something only commercial banks had the power to do before. That decision came as part of a rescue effort for Bear Stearns Cos., the nation's fifth largest investment bank. It nearly failed earlier this month before the Fed rushed in with a $30 billion line of credit to facilitate the sale of Bear Stearns to JP Morgan Chase & Co. The Fed's moves have put public money potentially at risk and increased calls for greater regulation of investment banks and other institutions. The Paulson plan is expected to generate intense debate in Congress, which would have to approve the changes. Some top Democrats, including Rep. Barney Frank, the chairman of the House Financial Services Committee, are pushing competing ideas that would streamline oversight but also impose new controls beyond those in Paulson's plan. Sen. Charles Schumer, a leading voice in the debate, said he did not think Paulson had gone far enough in dealing with some of the new complex types of investments heavily featured in the current financial crisis. "Very complex financial instruments have evolved in recent years," said Schumer, D-N.Y. "The Treasury Department should address these issues as well." David Nason, Treasury's assistant secretary for domestic finance, said the administration's primary goal is to get through the current credit crisis with officials understanding that the debate over an overhaul plan this far-reaching could last for years. "These are very complex issues that require a serious amount of debate," he said in an AP interview Saturday. "It is going to take time to play out." Business groups on Saturday generally voiced support for Paulson's approach and said there would be significant debate over the details. "The current crisis just shows in a very stark way that ... you need a regulatory structure that is simple, nimble and modern and ours does not meet that test," said David Hirschmann, president of the U.S. Chamber of Commerce's Center for Capital Markets Competitiveness. Tim Ryan, president of the Securities Industry and Financial Markets Association, a big lobbying group for Wall Street, said there was "universal agreement that it is time to modernize and revitalize the current system." The Paulson plan would: _designate the Fed as the primary regulator for market stability, greatly expanding its ability to examine any financial institution deemed to pose a risk to the stability of the system. _shift the functions of the Office of Thrift Supervision to the Office of the Comptroller of the Currency, although ultimately the plan envisions just one banking regulator. _merge the Securities and Exchange Commission with the Commodity Futures Trading Commission. _create a national regulator for insurance companies, which now are largely regulated by the states. _establish a commission to address the abuses exposed in the current tidal wave of mortgage defaults.
Its a two way street, you want the feds money which brokers are able to have access to, it comes with strings attached which is more control/access by the fed over the brokers business.
Well, all I care about right now is the fact that... wait... All power to the FEDERAL RESERVE!? I want the FR to be ELIMINATED. It is absolutely abominable in its control of the market, making sure the market is not a TRUE free market. It should be, and should have been, eliminated. Damn them. Damn them all.
I would enjoy seeing state banking regulators comments on this issue. Its ironic (or possibly conspiratorial) but prior to getting snagged w/ a prostitute Eliot Spitzer published an editorial in February, 2008 in the Washington Post suggesting that the Bush administration was an accomplice in the mortgage debt crisis; http://www.washingtonpost.com/wp-dyn/content/article/2008/02/13/AR2008021302783.html (some bloggers/writers have suggested he was targeted after that editorial. Here is a different article on a related but separate issue involving mortgages wherein a lender was freed from state regulatory oversight, moved to federal regulatory oversight and was freed to rip off investors. The article reports that while under state regulation, the company was prevented from taking investment money and moving it into the private pockets of the family with a controlling interest in the business.....and then while under fed oversight it was freed to do so. http://query.nytimes.com/gst/fullpa...93AA15751C0A9629C8B63&sec=&spon=&pagewanted=1 I'd simply like to see a large universe of comments from various interested parties on this proposal by Paulson.
He may be giving more power over banks using federal funds but is also consolidating the agencies. That means less government which is a good thing. They're going from 5 agencies overseeing the banks to 1. That sounds like more rules are needed at the federal level to cover these issues. It wasn't long ago that Payday loan companies were ripping people off by hiding the real interest rate. They are now required to put it in big bold numbers and point it out to you. Even credit card companies are bound by that rule as well which can sometimes lead to an inflated APR for certain transactions. They're essentially looking to do the same with mortgage companies and make sure they aren't making bad loans. On a small scale this wouldn't have been an issue. But then everyone got on the money train and suddenly the housing market saturated and banks could no longer count on the house being worth significantly more than the loan. A bad loan that is worth half the value of the house is not all that bad. If banks could sell the houses that are foreclosing we wouldn't be having this discussion. Most people, including the banks, assumed that when the payment went up either the owner would be making more money or they could just sell the house at a profit and everyone would win.
The only problem is, the FED is not a government agency. This is essentially the banks regulating the banks. Thomas Jefferson
In theory. And here we are in practice. Banks gave bad loans to get access to large amounts of property. All those people that couldn't afford to own a home anyway are learning a hard lesson in financial responsibilty and the banks are going bankrupt. Now they're whining because they own a bunch of worthless property. The only way a bank can take "your" property is if you don't pay back the money that they spent to get that property for you. I'm not too worried that banks will pull another land grab stunt again anytime soon. Hopefully people by then will also have learned their lesson and not make the same mistakes. Of course the interest rate in bold print on a payday loan does as much good as a surgeon general's warning.
Don't tell me about theory and practice. I was posting about this months ago, when the polyannas in P&R were telling me I was all doom and gloom, and that this was a normal economic downturn. You have a surface understanding of the economic situation. Typical of what someone might get from following it on television. For instance, you seem to think this is about bad loans, and stupid home buyers. I recommend you read the Depression and Stock market threads in this forum, and get up to speed.
Central planning (banking) can't save us from the herd mentality that got us into this mess and led us to this cliff we're standing at the edge of. I'm not surprised, this is actually about what I expect from the federal government regardless of who is nominally in charge. If you want to be president or a Senator, you need the media on your side. Citi, Goldman, JP Morgan, Deutschebank, they are all behind the Clear Channel funding deal, so the banks & robber baron families will have even more direct access to local news and radio. GE already dominates the nightly news (and federal subsidies) and who knows what plans Murdoch, Ted Turner, and Bill Gates are working on with their own media acquisitions & expansions.
Pretty good history of Financial regulation http://www.transworldnews.com/NewsStory.aspx?id=41897&cat=8
This new policy is yet another step toward the Big Crunch. And I don't mean the eventual death of the Universe.