From home loans to Wall Street’s overcomplicated wheeling and dealing, the federal administration has proposed to implemenet major new guidelines to overhaul the nation’s beleagured financial system under brand new legislation proposed yesterday to augment existing legislation, so says the Reuters online news network and other respected mainstream sources such as the Associated Press.
All in all, these specific steps could begin to modify the overall reduction of federal regulations which have been a trademark the past several decades or so. Despite all of this, however, the plan in question would do precious little to simplify and organize the mixed bag of various agencies which now oversee the financial arena. However, it calls for fundamental shifts in authority which would essentially wipe the slate clean and a whole new agency from the ground up, thereby reducing the authority of the ultra-powerful Federal Reserve. This new leaner and meaner agency would ultimately take over the job of overseeing home loans particularly and then dictate that the lenders give their customers more reasonable terms than previously in an attempt to prevent this kind of debacle in the future.
As an additional stopgap measure, the lenders who repackage loans to investors as composites would have to retain some five percent of the credit risk. This is a figure that certain analysts (myself included, I believe way too low) think is a mere token gesture. I am not certain if this alone will solve the whole problem, yet it should at least help in a time when the credit crunch seems to really be hurting the world economy overall. Speaking of that, there really ought to be much more free or at least non-profit credit counseling plus forms of Debt consolidation, Debt help and related services. Yet credit counseling, in particular, I think. Broadly speaking, the new proposal made a few consumer advocates joyful but basically terrified the banking industry with its possible incorporation of a commisioned regulator to insulate consumers in their individual banking transactions. Sizeable insurers did not especially like the decision not to impose a wide-ranging national-level regulation on the insurance sector, thus leaving it to the various individual states in question (which is the way it is set up now).
As it stands now, mutual funds remain, for the time being at least, under the overall authority of the Securities and Exchange Commission rather than the said agency. All of these specific steps have been an effort to find a middle ground somewhere between the relative pros and cons of the capitalist system.
Of course, time will tell how well these efforts work out, but at present it appears to be a reasonably well-balanced approach.
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