To continue the post below, Obama is also pushing to expand (though it might be more appropriate to say update) financial regulations by applying them to derivatives:
Marking its first major effort to overhaul financial regulation, the Obama administration will seek new authority to supervise the virtually unregulated complex financial instruments, known as derivatives, that were a major cause of the market crisis, Congressional aides and others who have been briefed on the decision said Wednesday.
The administration will ask Congress to approve legislation that would impose a new government oversight structure for the instruments, which Warren Buffett once called “weapons of mass destruction.”
In a two-page letter to Congressional leaders, Treasury Secretary Timothy F. Geithner asked for the swift approval of a measure that would require many kinds of derivative instruments, including credit default swaps, to be traded on exchanges and subject to tighter regulation. Derivatives can take many forms, but in total there are trillions of dollars’ worth exchanging hands every day around the globe.
Again this marks a significant shift in the role government plays in the economy, one that is more suspicious of business activities that the Bush Administration thought should be allowed to happen without oversight. As with anti trust policy, the more you trust the market, the less regulation you want, the less you trust it, the more.
- Comments by Gary Becker.
- Wikipedia entry on Financial Regulation.
- A History of Financial Regulation.
