Geithner to Propose Sweeping Regulations for Oversight of Financial System
Hedge funds would have to provide government reports on their operations, and large financial institutions would be subject to more oversight under sweeping regulations to be proposed today by Treasury Secretary Timothy Geithner.
The plan would be the most significant regulatory expansion since banking and mortgage reforms instituted after the Great Depression, the Washington Post reports. “In essence, the plan is a rebuke of raw capitalism and a reassertion that regulation is critical to the healthy function of financial markets and the steady flow of money to borrowers,” the story says.
The plan would require private-equity and hedge funds to reveal their investors, trading partners and borrowing to the government, the New York Times reports. The reports would be submitted to the Securities and Exchange Commission and shared with a new “systemic risk regulator.”
“Systemically important” banks and other financial institutions that are considered too big to fail would be subjected to stricter capital requirements under the plan, the Times says. The government would have the power to seize large firms nearing failure.
The plan would also seek greater regulation of financial derivatives such as credit default swaps. All standardized derivatives would be traded through a regulated clearinghouse, and traders would have to submit information on collateral and borrowing, according to the Times.
