Saturday, January 24, 2009
There's a new sheriff in town
And he's planning on taming the financial gunslingers on Wall St. Some of the ideas on the table.
Officials said they want rules to eliminate conflicts of interest at credit rating agencies that gave top investment grades to the exotic and ultimately shaky financial instruments that have been a source of market turmoil. The core problem, they said, is that the agencies are paid by companies to help them structure financial instruments, which the agencies then grade.All long overdue. And one more still in the planning stage that should please a lot of people, if it ever happens.
Aides said they would propose new federal standards for mortgage brokers who issued many unsuitable loans and are largely regulated by state officials. They are considering proposals to have the S.E.C. become more involved in supervising the underwriting standards of securities that are backed by mortgages.
The administration is also preparing to require that derivatives like credit default swaps, a type of insurance against loan defaults that were at the center of the financial meltdown last year, be traded through a central clearinghouse and possibly on one or more exchanges. That would make it significantly easier for regulators to supervise their use.
Administration officials have begun to study ways to control executive compensation.I suspect this one is just a tease. And I didn't see anything about re-regulating the commodity futures.
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