Days before the scheduled release of the Obama administration’s new financial regulatory framework, two top regulatory officials have published an op-ed in the Washington Post that offers a preview of things to come.
The piece, written by Treasury Secretary Timothy Geithner and National Economic Council Director Lawrence Summers, explains five crucial problems with the existing economic situation that the new reforms hope to mend.
“We have taken extraordinary measures to help put America on a path to recovery,” write the administration officials. “But it is not enough to simply repair the damage. The economic pain felt by ordinary Americans is a daily reminder that, even as we labor toward recovery, we must begin today to build the foundation for a stronger and safer system.”
Geithner and Summers go on to explain the five key problems that exist in the current financial regulatory structure:
- Regulation focuses too much on individual firms, and not enough on the interconnected financial system as a whole.
- Asset-backed securities have become too widespread, and not enough regulated.
- There isn’t sufficient consumer/investor protection.
- The federal government lacks the necessary tools to manage crises; a new resolution mechanism will be implemented.
- Global regulation isn’t adequately supervised and will be increased.
The Obama administration is expected to announce its reforms on Wednesday.