The US Treasury Department has proposed the following reforms of which a number of working papers are due by 31 December 2009.
(1) Promote robust supervision and regulation of financial firms. In order to aid accountability in financial oversight and supervision:
- A new Financial Services Oversight Council of financial regulators to identify emerging systemic risks and improve interagency cooperation;
- New authority for the Federal Reserve to supervise all firms that could pose a threat to financial stability, even those that do not own banks;
- Stronger capital and other prudential standards for all financial firms, and even higher standards for large, interconnected firms;
- A new National Bank Supervisor to supervise all federally chartered banks;
- Elimination of the federal thrift charter and other loopholes that allowed some depository institutions to avoid bank holding company regulation by the Federal Reserve;
- The registration of advisers of hedge funds and other private pools of capital with the SEC.
(2) Establish comprehensive supervision of financial markets. To encourage a system to withstand both systemwide stress and the failure of one or more large institutions through:
- Enhanced regulation of securitization markets, including new requirements for market transparency, stronger regulation of credit rating agencies, and a requirement that issuers and originators retain a financial interest in securitized loans;
- Comprehensive regulation of all over-thecounter derivatives; New authority for the Federal Reserve to oversee payment, clearing, and settlement systems.
(3) Protect consumers and investors from financial abuse. To rebuild trust and promote transparency, simplicity, fairness, accountability, and access through:
- A new Consumer Financial Protection Agency to protect consumers across the financial sector from unfair, deceptive, and abusive practices;
- Stronger regulations to improve the transparency, fairness, and appropriateness of consumer and investor products and services;
- A level playing field and higher standards for providers of consumer financial products and services, whether or not they are part of a bank.
(4) Provide the government with the tools it needs to manage financial crises. Equip the government with proper tools so as to avoid untenable choices between bailouts and financial collapse:
- A new regime to resolve non-bank financial institutions whose failure could have serious systemic effects;
- Revisions to the Federal Reserve’s emergency lending authority to improve accountability.
(5) Raise international regulatory standards and improve international cooperation.
- International reforms to support our efforts at home, including strengthening the capital framework; improving oversight of global financial markets; coordinating supervision of internationally active firms; and enhancing crisis management tools.
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