Monday, June 01, 2009

NYT: Financial Overhaul Plan

The New York Times
June 1, 2009

Washington is asking some painful questions about how to prevent the next financial meltdown. Should it reinvent the Federal Deposit Insurance Corporation? Abolish the seemingly feckless overseer of savings and loans? Grant new powers to the Federal Reserve?

All that — and more — is on the table as the Obama administration prepares to overhaul the regulatory apparatus that failed to prevent the gravest economic crisis since the Depression. Under consideration is everything from mortgages to credit cards to hedge funds to insurance. One possibility is creating a regulator to watch over companies that might put financial system in peril again should they run into trouble.

The plan, a central plank of the administration’s response to the current crisis, has already provoked a fierce lobbying battle by the various financial services industries that it could touch. The Treasury Department aims to complete the effort by mid-June, and senior Democrats in the House and Senate have vowed to complete legislation by the end of this year.

One radical proposal — combining the four federal agencies overseeing banks and thrifts into a single, super-regulator — already seems to be losing favor, lawmakers and policymakers said. But there is a growing consensus that one of the four, the Office of Thrift Supervision, which was responsible for oversight of the American International Group, should be eliminated as part of an effort to streamline oversight.

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