This afternoon, Secretary Geithner will meet with the Financial Stability Oversight Board.
Oversight Board members:
Secretary of the Treasury: Timothy Geithner
Chairman of the Board of Governors of the Federal Reserve System: Ben Bernanke [chair]
Secretary of the Department of Housing and Urban Development: Shaun Donovan
Chairman of the Securities and Exchange Commission: Mary Schapiro
Director of the Federal Housing Finance Agency: James Lockhart
I'm starting to think, and even believe, that the new "super-regulatory" agency will simultaneously swallow and abolish the Federal Reserve in its current form. Summers will still get his fiefdom, but it is not by accident a GS man is still heading Tresury. It seems likely the new agency will be based in the Treasury. One of the compelling reasons I see is that it would then be easier to cross reference tax-return data with banking activity.
ReplyDeleteWith the CFTC and SEC involved, it will also be more difficult to hide or channel funds from the taxman.
I wonder if this new agency will feed this data to GS' high-powered HFT as "non-price" inputs?
We will still have an agency to regulate coinage and by default interest rates, thus the FED will still exist.
Any way this goes, though, I conjecture that GS will eventually regret the centralized power. I think they are unintentionally delivering virtually unmitigated power to a group of people who have no clue the condequences of playing with something as potentially devastating as a nuclear missile.
Also, it would add more layers of bureaucracy to obfuscate the incestuousness of the FED, Treasury, SEC, GSEs Fannie and Freddie, etc.
ReplyDeleteI wonder if the team will talk about Citi's suit against Morgan Stanley for bailing on CDS commitments:
ReplyDeletehttp://dealbook.blogs.nytimes.com/2009/09/28/citi-sues-morgan-stanley-over-credit-default-swap/#comment-319825
China set the example. Morgan Stanley followed.