Shreds and patches

17 June 2009 By Richard Beales Follow @richardbeales1

Details of his overhaul of US financial regulation suggest a genuine effort to plug the worst holes. But much of it is a patchwork of tape, filler and dabs of paint. It will look better and could work better. But the best chance in decades of a full rebuild has gone begging.

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The US administration's plans for reform of financial regulation were expected to be released on June 17. A widely circulated draft proposes a broad systemic oversight role for the Federal Reserve; a new council of top regulators; a new tier of tougher regulation for systemically important institutions; new authority to wind down nonbank financial firms; and mandatory registration of all but the smallest hedge funds.

It also contemplates bringing overthecounter derivatives under the purview of the Securities and Exchange Commission and Commodity Futures Trading Commission, creating a new Consumer Financial Protection Agency, tighter regulation of credit rating firms and other changes.

Update: The US Treasury on June 17 released the full "white paper" and related factsheets outlining the Obama administration's plans.

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Shreds and patches

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