June 15, 2009
Geithner & Summers Outline Financial Reform
In today's Washington Post, Timothy Geithner and Lawrence Summers offer a preview of the financial reform package that President Obama is expected to outline on Wednesday. WPost, A New Financial Foundation. They outline five principles, including:
[O]ur current regulatory regime does not offer adequate protections to consumers and investors. Weak consumer protections against subprime mortgage lending bear significant responsibility for the financial crisis. The crisis, in turn, revealed the inadequacy of consumer protections across a wide range of financial products -- from credit cards to annuities.
Building on the recent measures taken to fight predatory lending and unfair practices in the credit card industry, the administration will offer a stronger framework for consumer and investor protection across the board.
Leaks to the media on the package, however, indicate that the SEC has prevailed, and mutual fund regulation will remain with that agency and not, as initially suggested, be included in any new investor protection agency. In addition, the package reportedly will not deal with reconciling the regulation of investment advisers and broker dealers, an issue that has been much discussed in the wake of the Madoff scandal.
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