Reactions to Obama's Financial Overhaul Vary
The Ticker scanned the econosphere for reaction to President Obama's plan to overhaul the regulations governing the nation's financial system in the wake of last year's collapse. Here's a sampling:
-- "The administration's proposal is so vast and controversial that it will be extremely difficult to enact and will produce great uncertainty in the financial markets," said Edward Yingling, president of the American Bankers Association.
-- "While markets are imperfect, regulators are even more so. Not only are they human, they are also bureaucratic and subject to political influences, therefore regulations should be kept to a minimum," billionaire investor and liberal activist George Soros wrote.
The Ticker finds this statement in disagreement with something Soros said in December: "It is the job of regulators to prevent bubbles from forming." Click here to read The Ticker's piece on Soros's controversial statement.
-- "Of course, there are some positive aspects to the Obama plan," the conservative Heritage Foundation's blog, the Foundry, grudgingly admits. "He recommends eliminating remaining limits on interstate banking. And, certainly, there are real problems in the current system that need to be addressed."
"But," the Foundry continues, "the plan offered today puts far too much faith in regulators to guide markets to where they should be. That is consistent neither with economics nor, given the role of many federal policymakers in contributing to the current crisis, with recent history. A better plan -- one that empowers consumers, rather than regulators -- is needed."
-- "The six principles set forth in the administration proposal represent a strong recognition of the need to modernize insurance regulation," the Financial Services Roundtable, the trade group of the financial services industry, said in a statement.
However: "The Roundtable is opposed to the creation of the Consumer Financial Protection Agency because it will not adequately serve the best interests of consumers and their financial institutions. The Roundtable opposes separating the regulation of the entity from the regulation of the products, as each regulator will only have half of the information," the trade group wrote.
-- “The financial turmoil of the last year revealed deep and serious flaws in our regulatory system," Timothy Ryan, president of the Securities Industry and Financial Markets Association, said in a statement. "The financial services industry believes it is critical to our nation’s economy that we work with policymakers in Washington to enact comprehensive reform this year to improve the accountability, transparency, investor protection and oversight of financial markets."
Ryan continued: "With their proposals today, the administration has moved this critical debate from broad discussion to specific action – this is an important step forward. We have a once-in-a-generation opportunity to rebuild our regulatory structure so that our financial system is more stable, more resilient and better underpins a dynamic U.S. economy."
-- "The Obama administration is presenting a misguided, ill-informed remake of our financial regulatory system that will likely increase the frequency and severity of future financial crises," Mark Calabria of the conservative Cato Institute wrote. "While our financial system, particularly our mortgage finance system, is broken, the Obama plan ignores the real flaws in our current structure, instead focusing on convenient targets."
Calabria continues: "Shockingly, the Obama plan makes no mention of those institutions at the very heart of the mortgage market meltdown – Fannie Mae and Freddie Mac. These two entities were the single largest source of liquidity for the subprime market during its height. In all likelihood, their ultimate cost to the taxpayer will exceed that of TARP, once TARP repayments have begun. Any reform plan that leaves out Fannie and Freddie does not merit being taken seriously." Read the full commentary by clicking here.
-- "Real reform has to include structural reforms, like breaking up massive financial institutions that are still exercising disproportionate political power over policies that are supposed to constrain them," the Notion, the blog of the liberal magazine the Nation, wrote. Read the full commentary here.
June 18, 2009; 5:03 PM ET
Categories: The Ticker | Tags: Financial Services Roundtable, George Soros, Obama, Securities Industry and Financial Markets Association, regulation
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