Six-Month Report Card

By Lisa Valentine

It’s difficult to keep up with the proposed regulatory changes the Obama administration is recommending. Since taking office in January, President Obama has been busy selling his plan for financial reform.

Timothy Geithner, U.S. Treasury Secretary, provided an overview of those changes to the House Financial Services Committee, just in case they’ve forgotten. Here are the five areas of focus for the administration, according to Geithner:

· Consumer Protection: One agency to rule them all: the Consumer Financial Protection Agency would supervise banks, non-banks, and any other entity that deals in any type of financial instrument, no matter how benign.

· Financial Stability: These moves include higher capital requirements: the expansion of the responsibilities of the Federal Reserve, making it the uber-regualtor of tier 1 financial holding companies: and creating a Financial Services Oversight Council to make sure the Fed doesn’t overstep its bounds.

· Market Oversight: This includes increasing OTC derivative regulations and requiring securitization sponsors to hold 5 percent of the credit risk and ending the practice of using credit rating agencies as consultants.

· Crisis Resolution: A new regulatory authority would be responsible for dealing with those firms too big to fail when they begin to fail.

· Level International Playing Field: Working with the G-20, the G-8, the Financial Stability Board and the Basel Committee on Banking Supervision.

It will be interesting to see what gets passed when the legislators return from their August break. If the market continues its rally, we may see less enthusiasm for these proposed reforms.