Bank Regulator Consolidation Said to Be Part of Obama Regulatory Overhaul Plan
The Wall Street Journal, citing unnamed sources, reports today that the Obama administration may propose a single regulatory agency for the entire banking sector. The "hodgepodge of federal agencies" now overseeing the industry has been cited as a factor in the government's slow reaction to the credit crisis as it morphed last year into a global catastrophe.
The proposal remains in flux, the newspaper reports, and will be part of a broader regulatory overhaul plan that the administration is expected to present next month. In interviews with Knowledge at Wharton, Wharton faculty have offered suggestions for changes to the financial regulatory structure. For an article titled, "Getting It Right: Making the Most of an Opportunity to Update Market Regulation," Wharton finance professor Richard Marston told Knowledge at Wharton that the "financial crisis is so serious, and clearly the mechanisms have broken down [to the extent] that we're really going to have to get more serious about regulation." He suggested that one possible model is a consolidated system, in which monetary policymakers and regulators are closely aligned, similar to that of the United Kingdom. "We'll have to start from scratch again and think about how we regulate finance and allow it to thrive, and not take undue risk which society as a whole has to pay for," he says. "It's a balancing act. Everything is on the table."
For more from Knowledge at Wharton about regulation in the post-crisis world, see "How the Credit Crisis Could Forge a New Financial Order," and "A World Transformed: Panelists Look Beyond the Crisis."