Commission, and creating a federal insurance charter (insurance companies are

Commission, and creating a federal insurance charter (insurance companies are currently all regulated by the states). But the longer-term idea is to meld almost all financial regulatory activities into two new agencies: the Prudential Financial Regulatory Agency, which would regulate all the depository institutions (let s just call them banks from now on) and insurance companies that get government insurance, and the Conduct of Business Regulatory Agency, which would be responsible for business conduct regulation, including consumer protection issues for banks, insurance companies, and all other financial services providers. Then there would be the market stability regulator, the Federal Reserve, which would have the power to snoop around any kind of financial institution it wants in search of risks to the financial system.
Now, I remain extremely dubious that we can rely on Fed staffers to be wise and strong-willed enough to identify looming problem areas and shut them down. Paulson apparently agrees: I am not suggesting that more regulation is the answer, or even that more effective regulation can prevent the periods of financial market stress that seem to occur every 5 to 10 years, he says in a draft of his speech obtained by the NYT. But if the Fed is going to be V-Checker V601 backstopping financial firms of all sorts in times of troubles, it does seem to make sense to give it some regulatory authority over all of them.
The most crucial element here might turn out to be the CBRA, the conduct-of-business agency, especially its consumer protection arm. What went wrong with mortgages was that sophisticated and ruthless financial markets interacted with unsophisticated consumers with no intermediation but that of mortgage brokers (whose incentive structure GM Tech-2 PRO Kit With CANDI Interface was all wrong) and minimal regulation.
Financial products, in particular loans, are useful but potentially dangerous things. Sort of like drugs. Or toasters. If the CBRA had an aggressive consumer arm maybe something along the lines of Elizabeth Warren s Financial