Financial Regulatory Reform, June 2009.

Excerpts:
INTRODUCTION
Over the past two years we have faced the most severe financial crisis since the Great Depression. Americans across the nation are struggling with unemployment, failing businesses, falling home prices, and declining savings.
Five key objectives:
I. Promote Robust Supervision and Regulation of Financial Firms
II. Establish Comprehensive Regulation of Financial Markets
IV. Provide the Government with the Tools it Needs to Manage Financial Crises
V. Raise International Regulatory Standards and Improve International
Cooperation
III. Protect Consumers and Investors from Financial Abuse
Prior to the current financial crisis, a number of federal and state regulations were in
place to protect consumers against fraud and to promote understanding of financial
products like credit cards and mortgages. But as abusive practices spread, particularly in the market for subprime and nontraditional mortgages, our regulatory framework proved inadequate in important ways. Multiple agencies have authority over consumer protection in financial products, but for historical reasons, the supervisory framework for enforcing those regulations had significant gaps and weaknesses. Banking regulators at the state and federal level had a potentially conflicting mission to promote safe and sound banking practices, while other agencies had a clear mission but limited tools and jurisdiction.

Most critically in the run-up to the financial crisis, mortgage companies and
other firms outside of the purview of bank regulation exploited that lack of clear
accountability by selling mortgages and other products that were overly complicated and unsuited to borrowers’ financial situation. Banks and thrifts followed suit, with
disastrous results for consumers and the financial system. This year, Congress, the Administration, and financial regulators have taken significant measures to address some of the most obvious inadequacies in our consumer protection framework. But these steps have focused on just two, albeit very important, product markets – credit cards and mortgages. We need comprehensive reform.

For that reason, we propose the creation of a single regulatory agency, a Consumer
Financial Protection Agency (CFPA), with the authority and accountability to make sure that consumer protection regulations are written fairly and enforced vigorously. The CFPA should reduce gaps in federal supervision and enforcement; improve coordination with the states; set higher standards for financial intermediaries; and promote consistent regulation of similar products. Consumer protection is a critical foundation for our financial system. It gives the public confidence that financial markets are fair and enables policy makers and regulators to maintain stability in regulation. Stable regulation, in turn, promotes growth, efficiency, and innovation over the long term.
Full Report: Financial Regulatory Reform. A New Foundation. http://srwolf.com/reports/R...