Regulatory Overhaul

QUESTIONS:

1. what are Treasury Secretary Paulson's main proposals? Dodd-Frank main proposals? Summarize, if possible.

2. What is the basic motivation behind each of these proposals?

3. For each of the proposals, discuss who is likely to support the changes and why.

4. For each of the proposals, discuss who is likely to fight against the changes and why.

5. Compare and contrast the original Treasury proposals and the actual finreg of 2010.

Treasury Secretary Henry Paulson proposal for regulatory overhaul was proposed in 2008. Secretary Paulson's' proposals main points included giving the Federal Reserve new power to serve as the protector of stability for the entire financial system. The plan would get rid of institutions such as the Office of Thrift Supervision and the Commodity Futures Trading Commission. Any responsibilities those agencies had would be then placed on other agencies. Secretary Paulson also envisioned a three stage process that would lead to establishing three main regulatory agencies. The Federal Reserve would have extended responsibilities as the market stability regulator but would lose its powers over bank holding companies. Paulson's proposal would also combine the five agencies that regulate banks, thrifts, and credit unions into one single agency. The powers of the Securities and Exchange Commission (SEC) would be formed into a super agency responsible for business conduct and consumer protection.

The Dodd-Frank Wall Street Reform and Consumer Protection Act main proposals include creating an independent watchdog located at the Federal Reserve that has the power to supply American consumer's clear and accurate information to shop for mortgages, credit cards, and other financial products. The watchdog will also protect the consumers from hidden fees, abusive terms, and deceptive practices. The act also proposes to create a safe way to liquidate failed financial firms by imposing tough new capital and leverage requirements that restrict the firms from getting to big. There is also a proposal for creating a council to identify warnings and risks from big companies before they have a negative effect on the economy. Another main proposal is the elimination of risky and abusive practices that go unnoticed