Friday, 11 April 2008 22:17
In what would be the most profound reorganization of the securities market since the Great Depression, Treasury Secretary Henry Paulson suggested to merge the SEC and the CFTC in response to the growing concerns over the regulatory oversight of the equity market. Besides the merging of the two largest and most powerful securities agencies, Secretary Paulsons proposal would also include codifying the ad hoc market stabilization powers of the Federal Reserve as recently seen in the bail-out of Bear Stearns. The ultimate goal of these sweeping changes would to streamline the current regulatory structure by creating a set of federal regulators who could oversee all faucets of the financial system, from banks to hedge funds to futures.
Even though such unprecedented regulatory changes might indicate tighter control of the securities industry, many analysts of the proposal have commented that the changes will not result in restrictive control or more rigid oversight. Rather, the proposal would still allow the market to regulate the securities industry with the government only intervening in times of crisis. The proposal would need the approval of Congress to be enacted, and given the mixed reaction of the legislature such approval might not come for quite a while, if ever.