The Obama administration has finally revealed the foundation of its planned overall of the U.S. financial system's oversight function. According to a report in The Wall Street Journal, the new rules of the road will see the Federal Reserve taking an even larger role in overseeing financial institutions as its power expands to monitor a broader array of risks across the entire economy. The proposal also includes tougher capital requirements for large banks and gives regulators the authority to take over large, floundering financial firms.
The administration's goal is to unveil its proposals before G-20 heads of state meet April 2 in London, according to the Journal.
The new regulatory regimen comes as a result of what many lawmakers feel was a lax oversight culture which they claim caused the financial crisis. However, hammering out the final version of the new rules will take a delicate hand as to avoid further interrupting the flow of credit, notes the Journal.
Among the other highlights of the administration's scheme, says the Journal are:
Changes in the way banks are overseen to prevent them from shopping for the regulator with the lightest touch. More transparency and stricter rules for the way money flows between banks. Consolidation of consumer-protection enforcement.