LEX The 90-page white paper on US regulatory reform has something for everyone – to argue over, that is. Bickering was inevitable. But the proposals are a comprehensive, nuanced attempt to elucidate a new structure for regulation.
Radicals are disappointed that only the Office of Thrift Supervision, an agency so disparaged iits demise was a foregone conclusion, gets the chop. In tripping delicately through the existing regulatory maze, however, the Treasury has hopefully kept some political powder dry to fight questions of greater substance.
One is the emerging power of the Federal Reserve. It can designate companies of systemic importance and bring them under its top-level supervision. Former limits to the Fed’s power, in areas such as payments and settlements, or checking up on broker-dealers, are removed.
This constitutes a quiet consolidation of regulatory authority behind the mish-mash of acronyms and agencies, intended perhaps to avoid overly politicising the Fed’s remit. There will usually be another body to take the flak.
Elsewhere, the white paper wades into classic US schisms – including the separation of banking from commerce (possibly signalling the end of retailers’ store cards, say) and the authority of states versus the federal government.
Establishing a national monitor for the insurance sector, with measures to impose greater consistency across state regulators merely threatened, suggests a lack of appetite for that battle.
A new consumer protection agency meanwhile could rile both those who resent local powers slipping away to Washington and large companies who fear states’ ability to impose their own stricter variants of centrally determined rules.
Other sections remain light-weight. The old standoff between securities and futures regulation is barely addressed. And no one knows what more, high-quality capital for banks actually means. The detailed wrangling has yet to start.
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