In this background note, Gordon McDonald compares certain key elements in the Paulson Treasury's The Blueprint for a Modernized Financial Regulatory Structure with those in the Geithner Treasury's report, Financial Regulatory Reform, A New Foundation: Rebuilding Financial Supervision and Regulation. The main areas addressed include: consumer protection, the role of the Fed, resolution authority, bank regulation, securities and futures regulation, derivatives regulation, credit rating agency reform, securitization reform, executive compensation reform, insurance regulation, housing GSEs reform, and international coordination.
Key similarities between the reports include: recommendations that a single agency be created with responsibility for consumer protection; that the Fed be given new resources and discretionary policy tools to monitor and mitigate systemic risk; that the thrift charter be eliminated; that the OTS and the OCC be consolidated; that there be uniform registration of private pools of capital; that broker-dealer and investment adviser regulation be harmonized and; that a dedicated national insurance office be created.
Salient differences include federal preemption of state consumer protection laws; the recommended role of the Fed in financial institution supervision; the creation and role of a permanent council of regulators; the creation of a resolution authority for failed (or failing) nonbank financial institutions; the creation of an optional national insurance charter; the merging of the SEC and CFTC, and specific recommendations on international financial regulation.
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