Bank Oversight Needed Now!
Although there are many causes to the collapse of the banking industry in 2008, there is one common, guilty party, lack of federal oversight. This lead to the sub prime leading that caused the instability of the whole system. Now, almost a year after the climax of the banking crisis, lawmakers are finally addressing preventative regulatory issues. Christopher J. Dodd, senator from Connecticut, is the main push behind a new bill that would address the powers of the certain government regulatory industries, mainly the Federal Reserve, the Office of Thrift Supervision, the Federal Deposit Insurance Corporation and the Comptroller of the Currency. Mr. Dodd’s plan would merge all the regulatory agencies into one large complex ruled by a powerful council.
This part of the Dodd plan is significantly different than that originally proposed by the Obama administration. The administration originally proposed a less severe change in the regulatory agencies, the Federal Reserve, Office of Thrift Supervision, The Federal Deposit Insurance Corporation, and the Comptroller of the Currency. Although this plan is somewhat different President Obama told Congress to adopt the law quickly. However, this merge would grant the powerful council the powers to regulate what I call “non-banks.” These “non-banks” are lending agencies similar to General Electric Capital Corporation and pre- takeover Merril Lynch that provide financial capital but escape government regulation. The chaotic derivatives market would also fall under the new federal jurisdiction, an important step in regulating the turbulent market.
Mr. Dodd faces criticism from members from both parties in his attempts. His home state, Connecticut, is home to many large banks. People in the financial service industry are resistant to the Dodd Plan. Mr. Dodd might be reluctant to take on the banking industry, a big financial contributor to his campaign. However, he is also eager to appear stricter of them in light of his upcoming campaign to appease the voters who view him as too close.