October 27, 2009
All of a Sudden, Financial Regulation Looks Realistic
Posted by David Zaring

It looked like the Obama administration was lying low on financial regulatory reform, and the old system certainly had its advantages, as well as many problems, so I've suggested, with Larry Cunningham, that incremental reform might be wise.  But the politicians have decided - for now - that it is going to be easier to do financial regulation than it is climate change, and so the former is - for now - probably coming next.  This Bloomberg article isn't a bad overview, via Securities Mosaic.  And although it is fun to track the ins and outs, it isn't clear whether the administration will pivot again at the Copenhagen climate change summit.  But one interesting aspect of the new impetus is that the administration appears to think that enhanced resolution authority - the ability to swing into action and take over big financial intermediaries, defined more broadly than banks and thrifts - is an obtainable legislative goal.  I haven't heard much opposition to it, either.  But in Europe there's lots of concern that enhanced resolution authority could lead governments to zero out owners of valuable, but teetering assets - all those branches and those smart employees must be worth something, right?  The owner interest here does not appear to be nearly so concerned.

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