Re: Fed to expand powers to regulate every aspect of the financial sector

On Mar 30, 10:31 am, "jwpgarr...@xxxxxxxxx" <jwpgarr...@xxxxxxxxx>
wrote:
http://www.cnn.com/2008/US/03/28/financial.oversight/index.html
WASHINGTON (CNN) -- The Federal Reserve would have the power to
regulate virtually the entire financial industry under a Treasury
Department proposal to be announced Monday.
art.paulson.blitzer.cnn.jpg

Treasury Secretary Henry Paulson will introduce the proposals in a
speech Monday, a spokeswoman says.

The proposal is part of a sweeping overhaul of the government's
regulatory structure that Treasury Secretary Henry Paulson will
propose in a speech Monday, said Treasury Department spokeswoman
Michele Davis.

"I am not suggesting that more regulation is the answer, or even that
more effective regulation can prevent the periods of financial market
stress that seem to occur every five to 10 years," Paulson will say,
according to a text of the speech obtained by The Associated Press.

According to Brookly McLaughlin, another department spokeswoman,
Paulson will propose these changes:

* Give the Federal Reserve authority to look at the financial status
of any institution that could affect market stability;

* Merge the Securities and Exchange Commission with the Commodity
Futures Trading Commission;

* Give stock exchanges more room for self-regulation;

* Consolidate bank supervision into one regulator.

One of the most dramatic changes would extend the powers of the
Federal Reserve -- designed to regulate the commercial banking
industry -- to oversight of virtually the entire financial industry.

That change would make the Fed the first responder to a potential
financial crisis. Currently, several agencies and commissions have
oversight over various parts of the industry, but none has the broad
authority.

The proposals have been in the works since June -- two months before
the current sub-prime mortgage crisis began affecting financial
markets, Davis said.
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Nevertheless, the proposed change would help the oversight and
regulatory system catch up with the events of the last two weeks, when
the Federal Reserve intervened to facilitate the sale of failing
brokerage Bear Stearns to JP Morgan Chase.

The financial industry's initial response was positive.

Tim Ryan, president and CEO of the Securities Industry and Financial
Markets Association, called Paulson's proposals "a thoughtful and
sweeping plan."

"Our present regulatory framework was born of Depression-era events
and is not well suited for today's environment where billions of
dollars race across the globe with the click of a mouse," he said.

"That fact, teamed with the current market conditions, result in a
universal agreement that it is time to modernize and revitalize the
current system."

Some of the proposals -- broadening the focus of a presidential
working group on financial markets and tightening oversight on
mortgage originators -- are classified as short-term recommendations.

Davis said the department does not expect to finish the longer-term
proposals before President Bush leaves office in January. Instead, she
said, Paulson is trying to start the process of creating "a better
regulatory framework so we're in better shape next time" there's a
rough patch in the economy.

The banking and financial industry regulation structure has been
developed over decades, from the establishment of the national bank
charter in 1863 to the creation of the Federal Reserve system in 1913
to recent changes made in response to other crises.

The ever-expanding complexities of global markets have largely
outgrown some of the structure's component parts, creating weaknesses
and redundancies.

Nearly all of the proposals will require the approval of Congress,
where Democrats are at work on their own proposals.

Sen. Charles Schumer, D-New York, said that Democrats "agree with
large parts" of Paulson's plan but think the proposals should go
further.

"Very complex financial instruments have evolved in recent years, like
[collateral debt obligations] and credit default swaps, which pose
potential problems in terms of systemic risk," Schumer said. "The
Treasury Department should address these issues as well."
------------------------------------------

This is scary stuff letting the Federal Reserve have this much control
over the economy.  Remember, these are the guys who couldn't stop the
housing market and faulty debt from exploding in our faces, so why
would they do any better with the entire system completely at their
control?  Also, unlike Congress, these guys are not accountable to the
public, so if these guys start pulling a fast one on us there is
nothing we can do.

I'm not one for conpiracy theories, but this just seems too fishy.
I'm starting to think the greenspan bubble was created on purpose in
order to get these kinds of authoritarian regulations into place.
This recession could have been avoided if the Government focused on
eliminating the speculative rise on housing prices by targeting land
speculation and tightening up on lending rules to those who are
unlikely to pay their debt.

There is abosolutely no need for this kind of control over the economy
in order to implement counter-cyclical measures.  Treasury Secretary
Henry Paulson will make his speech on this proposal Monday so
hopefully we can get a better sense of what they have planned.



the fed! amazing, a privately owned, foreign entity to control US
financial markets? My guess its a forced move, these private bankers
have offered us a bail out to some extent if we turn the courntry over
to them,


Phil scott
.