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WH: Financial Overhaul Plan Is Cautious

By Ben Pershing
President Obama this afternoon will lay out a proposal for an ambitious, sweeping overhaul of the financial regulatory system that, if you subscribe to the message coming out of the White House in the last 24 hours, isn't nearly as ambitious or sweeping as it could have been.

Obama's plan "will touch almost every corner of financial markets, from tougher consumer-protection policies to stricter rules over exotic financial products, such as credit derivatives," the Wall Street Journal says. It would give the Federal Reserve more leeway to prevent future breakdowns in the markets (paging Ron Paul!), endow the government with more power to take over ailing financial firms, bolster consumer protections and impose new regulations on financial instruments like mortgage-backed securites.

And yet the primary administration message this morning seems to be this: We showed restraint. "Senior officials debated using a bulldozer to clear the way for fundamental reforms but decided instead to build within the shell of the existing system, offering what amounts to an architect's blueprint for modernizing a creaky old building," according to the Washington Post. The New York Times calls the plan the product of "weeks of meetings" with various interest groups, one that "results from many compromises with industry executives and lawmakers, and is not as bold as some had hoped." All of this is probably true, but it's also the angle that best helps the administration calm financial markets and reassure the public that none of this is too radical. If you don't like all this government meddling, the story goes, be aware that it could have been much worse!

Continue reading at Political Browser »

By Ben Pershing  |  June 17, 2009; 8:30 AM ET
Categories:  The Rundown  
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Next: Video: Obama Would - and Does - Hurt a Fly


The best response I've heard is Senator Dodd's observation that giving the Federal Reserve more authority “is like a parent giving his son a bigger, faster car right after he crashed the family station wagon.”

Clearly no single entity has more responsibility for the current economic crisis than the Federal Reserve, and the power invested in Alan Greenspan to facilitate such a catastrophe demonstrates precisely why consolidating oversight responsibilities in one individual would be the worst possible course of action if corrective measures are to occur in the future.

Posted by: venusvictrix | June 18, 2009 4:48 PM | Report abuse

I don't get these people (probably all 2 dozen paultards) saying we need to "audit the fed". The Fed gets audited plenty, and there's nothing there we don't already know. These wackos are the reason we're in the mess we're in now. They focus too much on mundane technicalities and ignore actual issues like the health care crisis and the faltering economy.

Posted by: ChrisBear1 | June 18, 2009 1:02 PM | Report abuse

Gator-Ron, check your metaphor. The Fed IS the salmonella.

Posted by: jdadson | June 17, 2009 9:26 PM | Report abuse

No need to page him. There is a doctor in the House. Ron Paul is on the case. HR 1207, The Federal Reserve Transparency Act of 209, has over 240 co-sponsors - well above the 218 which is a simple majority of the House of Representatives. The Powers That Be will fight it, naturally. But if it passes, and if and when the American people are allowed to see what that institution does with the paper they hang, everyone will know that the Fed is too big to exist.

In the meantime, giving the Fed more regulatory authority would only be a matter of putting a different pack of the foxes in charge of the hen house - probably nothing lost, but certainly nothing gained.

Posted by: jdadson | June 17, 2009 9:22 PM | Report abuse

Any entity that is too big to fail has allied itself with the government and therefore needs to be monitored by its sometime partner.

Cutting down the size and having less regulation but more transparency seems to be an idea that could find wider acceptance.

Those who want to allow too big to fail institutions to fail instead of regulating probably would prefer Salmonella poisoning in someone other than themselves rather than taking the tainted product off the market.

Posted by: Gator-ron | June 17, 2009 5:52 PM | Report abuse

Wait, why should we be giving the Fed any leeway on anything??

Posted by: bmxer015 | June 17, 2009 1:57 PM | Report abuse

The words "too big to fail" come to mind here. Any business or grouping that comes under this heading needs to have clear & fair government oversight to protect the American people. That is, after all the role of Government, is it not?

Posted by: JoeNTx | June 17, 2009 12:40 PM | Report abuse

Hooray! Here comes the FED to the rescue. Excuse me while I put in another order for SPAM and bullets.

Posted by: tagger | June 17, 2009 11:01 AM | Report abuse

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