Today is regulatory roll-out day, with the president speaking at 12:50 this afternoon on the plan intended to answer the question: How can we make sure this financial crisis doesn't happen again? How can we protect ourselves from risk?
The Washington Post obtained an early draft of the administration's white paper, which you can peruse here [PDF]. (Update: Here is the official draft.)Last night I was part of a briefing by a "senior administration official" -- as per usual, nothing controversial was said but I can't ID the actual briefer -- and the Consumer Financial Protection Agency, at least as described, seems like it's going to be a very useful and important clearinghouse for protecting everyday borrowers trying to access consumer credit. The official made it seem like the agency would have broad rulemaking and enforcement ability. This may be the best part of the plan.
The various consolidation plans, including eliminating the Office of Thrift Superivsion and changing the Office of the Currency Controller into a National Banking Supervisor, are good so far as they go, but they don't go far enough in eliminating redundancies and "alphabet soup." There are going to continue to be questions of overlapping jurisdictions that can only be solved by having smart, committed people working at these agencies. I'm still trying to figure out if the resolution authority is powerful enough to wind down failing firms, if the various market rules proposed go far enough, and if the Fed's role as systemic risk regulator will have any real affect. I'll be spending the next few days at a whirlwind of briefings and interviews for a piece on Friday, but no doubt I'll be dropping tid-bits on the blog. (If you all have specific questions, leave 'em in the comments).
A few things to read: George Soros is skeptical about going too far and not going far enough. Bob Reich has some suggestions. Simon Johnson is offering conspiracy theories instead of analysis, which is too bad. Felix Salmon is unimpressed. For my part, I tend to agree with Matt Yglesias' early impressions: "Under the circumstances, these proposals seem like a plausible improvement on the status quo and should also leave us in a much better situation to mop up a future mess if it arises."
-- Tim Fernholz
