The phrase “damp squib” has since come into general use to mean anything that fails to meet expectations. The word “squib” has come to take on a similar meaning even when used alone, as a synonym for dud.
Because this will take a year to enact through legislation, I wonder whether it will be relevant when the final version in place? Banks will probably be stronger. Wall Street will be in somewhat better shape. Still, I am hopeful this will be a productive effort, given the lack of effective regulation that enabled a whacked out credit environment.
On Monday, Timothy Geithner, secretary of the Treasury and Lawrence Summers, director of the National Economic Council wrote an Op-Ed piece for WaPo called A New Financial Foundation. Here’s the conclusion:
By restoring the public’s trust in our financial system, the administration’s reforms will allow the financial system to play its most important function: transforming the earnings and savings of workers into the loans that help families buy homes and cars, help parents send kids to college, and help entrepreneurs build their businesses. Now is the time to act.
The administration has been working hard to develop a plan.
Tonight, the administration released the details of the plan to revamp the financial regulatory system, one of many aspects of the financial system that didn’t function.
The Obama administration last night detailed a series of proposals that would involve the government much more deeply in the private markets, from helping to steer consumers into affordable mortgage loans to imposing new limits on the largest financial companies, in a sweeping effort to prevent the kinds of risk-taking that sparked the economic crisis.
The plan is an attempt to overhaul an outdated system of financial regulations, according to senior administration officials.
It would vastly increase the powers of the Federal Reserve in an effort to create stronger and more consistent oversight of the largest companies and most important markets.
It also would create a new agency to protect consumers of mortgages, credit cards and other financial products.
I’m hoping something constructive comes out of this and not simply more regulation. This is being done in the name of prevention, and has limited impact on the current situation in the housing/mortgage/credit markets.
I can’t over the feeling that we will end up creating regulations for what we went through rather than where we are going.
Tags: Tim Geithner