Our Awful Situation

Fed changes announced

Posted by patriot on March 31st, 2008

Says CNN:

Among the plan’s biggest proposals is to provide additional powers to the Federal Reserve, which, along with the Treasury Department, has attempted to shepherd the nation through the housing crisis. Earlier this month, the Fed orchestrated a marriage between JPMorgan Chase (JPM, Fortune 500) and Bear Stearns (BSC, Fortune 500), which was on the verge of a collapse that could have caused shockwaves throughout the financial system.

Under the Paulson plan, the Fed would essentially serve as a financial markets moderator, stepping in if the nation’s markets were again threatened by an episode like the near collapse of Bear Stearns. Currently the central bank is responsible for setting the country’s monetary policy as well as acting as a supervisor of certain banks and all bank holding companies.

The article makes no mention of who must approve this new system of oversight, but one must assume that it will be sent to Congress instead of mandated through fiat executive order.

The proposal would also establish a new federal regulator for the mortgage industry, affecting both lenders and brokers, which now follow a patchwork of state regulations.

Paulson’s plan includes other bold moves, including bringing previously unregulated financial entities like hedge funds and private equity firms within the reach of federal authorities and federalizing the oversight of the insurance industry.

But it is cautious in not pushing for too much regulation, which could meet with criticism from Congressional Democrats.

As the article implies, Republicans will probably lap this one up like a thirsty dog. Ridiculous!

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Our Awful Situation

Fed changes announced

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