Investor Group Releases Reform Report
posted by Lawrence Cunningham
Weighing in against the Obama Administration’s proposal to reform the financial system by vesting more power in the Federal Reserve and a council of regulators, the (much-awaited) report of the Investors’ Working Group rejects those proposals in favor of establishing a new, independent, Systemic Risk Oversight Board.
The report rejects expanding the Fed’s powers in part because of the Fed’s competing duties (monetary policy and payment system management) and in part because of its “tarnished” reputation in contributing to the current crisis; it rejects using a council of regulators based on concerns about blurred lines of authority and lack of accountability.
Its proposed Board would be an independent agency of the federal government. The President would appoint members, subject to Senate confirmation, and it would be accountable to Congress. Its sole mission would be to serve as a watchdog for risk management across the financial sector. Its authority would primarily be to oversee and coordinate financial regulators.
Among other reforms the report endorses is one Congress has resisted for years, merging the SEC and CFTC, and others gaining more consensus on the Hill: regulation of credit rating agencies; transparency in derivatives markets; stronger capital requirements; limits on proprietary trading by banks; and federal oversight of insurance companies.
Formed jointly by the Council of Institutional Investors and the CFA Institute, the IWG is a non-partisan task force of distinguished leaders. Co-chairs are two former SEC Chairs, Arthur Levitt and Bill Donaldson; members include Columbia Law Professor and former SEC General Counsel, Harvey Goldschmid. I helped the IWG formulate its initial framework for developing this report and Georgetown Law Professor Don Langevoort provided technical advice during its drafting.
[There appear to be some timing and technical difficulties concerning release of and access to the report. It had been embargoed through noon Eastern time today but leaked early; the IWG link works sporadically; this alternative link may work.]
July 15, 2009 at 10:52 am
Posted in: Current Events
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