Tags: volcker | obama | plan

Volcker Proposes Radical Financial Plan

By    |   Thursday, 15 Jan 2009 02:11 PM

Key Obama adviser Paul Volcker is the lead author of new and radical economic plan that would effectively alter the global financial structure.

The plan contains 18 major recommendations that would give regulators more power over financial institutions than they have ever had before, including creating new laws to regulate financial derivatives, limit the size of banks, set guidelines for executive pay, and regulate hedge funds.

The report — entitled "Financial Reform: A Framework for Financial Stability" — was issued by the Group of 30, which Volcker heads. Volcker was chairman of the Federal Reserve under Presidents Jimmy Carter and Ronald Reagan.

Other recommendations in the plan include requiring major mutual funds to operate as commercial banks and forcing funds that choose not to comply to sell only low-risk, and less profitable, financial products.

The plan report also advises regulating venture capital groups and rating agencies, and prohibiting banks from managing private equity or hedge funds.

"We hope that our proposals, which explicitly relate to the weaknesses that have become evident in the financial system over the last year, will be a useful contribution to the debate about needed reforms both by private financial institutions and by public authorities," Volcker said in a statement.

Volcker, whose role will be to help President-elect Barack Obama overhaul the U.S. financial system, says he will press the new administration to consider adopting the measures.

Obama has said his administration will come up with a way to prevent a repeat of the current financial crisis before April, when world leaders meet for a major economic summit.

“Volcker has Obama’s ear and there is no doubt that the U.S. will be on the same page as most of these G-30 recommendations for greater financial-services regulation,” Bank of Tokoyo-Mitsubishi Chief Economist Chris Rupkey told Bloomberg.

“The worst Wall Street financial crisis has gone global, and not a regulator worth his salt will back down from tightening up the regulatory regime.”

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Key Obama adviser Paul Volcker is the lead author of new and radical economic plan that would effectively alter the global financial structure. The plan contains 18 major recommendations that would give regulators more power over financial institutions than they have ever...
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2009-11-15
Thursday, 15 Jan 2009 02:11 PM
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