GAO: Fix Our Broken Regulatory System

GAO: Fix Our Broken Regulatory System - 1/12/2009

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GAO: Fix Our Broken Regulatory System, The Government Accountability Office Compiles A History Of Regulatory Failures And Proffers Some General Suggestions On How To Fix Them.
Tim Reason

CFO.com. January 12, 2009
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EXCERPT: The nation's fragmented financial regulatory system is well beyond retirement age and ready for replacement, says a report released Friday from the Government Accountability Office. With the nation in the midst of a severe financial crisis, the GAO report is the latest in a slew of official and unofficial reports aimed at overhauling the nation's financial regulatory system. "As the nation finds itself in the midst of one of the worst financial crises ever," says the report, "the regulatory system increasingly appears to be ill-suited to meet the nation's needs." Indeed, the report notes that portions of the current regulatory system date back to the Civil War and points out that most banking and securities regulation was put in place at the turn of the century or during the Great Depression. Unlike most other reports — which propose specific changes — the GAO report is intended, as its title suggests, to provide "A Framework for Crafting and Assessing Proposals to Modernize the Outdated U.S. Financial Regulatory System." The GAO report is perhaps most interesting as a history of the United States's current regulatory system, which it details at some length. Its conclusions, by contrast, aren't particularly surprising: Any reform proposal, the GAO says, should have clearly defined regulatory goals and a system-wide focus, and should be comprehensive, flexible, efficient, and cost effective to the taxpayer. Regulators, it says, should be independent and accountable, and institutions that are similar should be subject to consistent regulation. […] Another significant recent reform proposal is the Treasury Department's Blueprint for a Modernized Financial Regulatory Structure. Among its recommendations, that report proposed combining the Securities and Exchange Commission with the Commodity Futures Trading Commission and handing more lending and oversight power to the Federal Reserve.

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