Faced with continued market weakness, US President Barack Obama’s administration is to unveil a plan to bolster the US financial regulatory system, two top presidential economic aides said yesterday.
US Treasury Secretary Timothy Geithner and chief White House economic adviser Lawrence Summers gave a broad outline of their plan in an op-ed piece in the Washington Post.
They did not say when exactly their plan, which is also aimed at giving the system a global reach, would be made public. But media reports suggested this could come as early as tomorrow.
“Reassuring the American people that our financial system will be better controlled is critical to our economic recovery,” the officials wrote. “We will lead the effort to improve regulation and supervision around the world.”
The five-point plan aims to create “a more stable regulatory regime that is flexible and effective” while guarding the system “against its own excess,” Geithner and Summers said.
The government will impose stringent capital and liquidity requirements for the largest and most “interconnected” financial firms.
And all large financial institutions whose failure could threaten the stability of the system will be subject to supervision by the US Federal Reserve.
The government will also establish “a council of regulators” with broader coordinating responsibility across the system.
Geithner and Summers said that the dramatic growth in financial activity outside the traditional banking system, such as the spread of asset-backed securities, had led to “an erosion of lending standards.”
It was this that had resulted in a market failure that had deepened the bust of the housing sector.
That is why, they said, the administration’s plan would impose new reporting requirements on the issuers of asset-backed securities, reduce investors’ and regulators’ reliance on credit-rating agencies.
The plan would also require the originator, sponsor or broker of a securitization to retain a financial interest in its performance.
Financial instruments known derivatives would be subject to regulation, their dealers would be supervised by the government and regulators “will be empowered to enforce rules against manipulation and abuse,” the officials said.
Saying that “weak consumer protections against subprime mortgage lending bear significant responsibility for the financial crisis,” Geithner and Summers added that the administration would offer a stronger framework for consumer and investor protection across the board.
The plan would also include measures to contain and manage future financial crises, they said.
The federal government would have broad authority and “a resolution mechanism” to intervene to forestall a possible collapse of “any financial holding company whose failure might threaten the stability of the financial system,” they said.
“This authority will be available only in extraordinary circumstances, but it will help ensure that the government is no longer forced to choose between bailouts and financial collapse,” they wrote.
Finally, the administration plans to work with its international partners to raise international regulatory standards that could be effective in a globalized world, the article said.
ROLLER-COASTER RIDE: More than five earthquakes ranging from magnitude 4.4 to 5.5 on the Richter scale shook eastern Taiwan in rapid succession yesterday afternoon Back-to-back weather fronts are forecast to hit Taiwan this week, resulting in rain across the nation in the coming days, the Central Weather Administration said yesterday, as it also warned residents in mountainous regions to be wary of landslides and rockfalls. As the first front approached, sporadic rainfall began in central and northern parts of Taiwan yesterday, the agency said, adding that rain is forecast to intensify in those regions today, while brief showers would also affect other parts of the nation. A second weather system is forecast to arrive on Thursday, bringing additional rain to the whole nation until Sunday, it
CONDITIONAL: The PRC imposes secret requirements that the funding it provides cannot be spent in states with diplomatic relations with Taiwan, Emma Reilly said China has been bribing UN officials to obtain “special benefits” and to block funding from countries that have diplomatic ties with Taiwan, a former UN employee told the British House of Commons on Tuesday. At a House of Commons Foreign Affairs Committee hearing into “international relations within the multilateral system,” former Office of the UN High Commissioner for Human Rights (OHCHR) employee Emma Reilly said in a written statement that “Beijing paid bribes to the two successive Presidents of the [UN] General Assembly” during the two-year negotiation of the Sustainable Development Goals. Another way China exercises influence within the UN Secretariat is
LANDSLIDES POSSIBLE: The agency advised the public to avoid visiting mountainous regions due to more expected aftershocks and rainfall from a series of weather fronts A series of earthquakes over the past few days were likely aftershocks of the April 3 earthquake in Hualien County, with further aftershocks to be expected for up to a year, the Central Weather Administration (CWA) said yesterday. Based on the nation’s experience after the quake on Sept. 21, 1999, more aftershocks are possible over the next six months to a year, the agency said. A total of 103 earthquakes of magnitude 4 on the local magnitude scale or higher hit Hualien County from 5:08pm on Monday to 10:27am yesterday, with 27 of them exceeding magnitude 5. They included two, of magnitude
Taiwan’s first drag queen to compete on the internationally acclaimed RuPaul’s Drag Race, Nymphia Wind (妮妃雅), was on Friday crowned the “Next Drag Superstar.” Dressed in a sparkling banana dress, Nymphia Wind swept onto the stage for the final, and stole the show. “Taiwan this is for you,” she said right after show host RuPaul announced her as the winner. “To those who feel like they don’t belong, just remember to live fearlessly and to live their truth,” she said on stage. One of the frontrunners for the past 15 episodes, the 28-year-old breezed through to the final after weeks of showcasing her unique