Here Are the New Financial Regulations

As announced earlier this week, the White House has issued its near-final version of a new regulatory framework for the financial industry. The official rollout will be televised shortly. Meanwhile, here is the current version [pdf] of the regs, courtesy of the Washington Post.

One ominous part of the new regs is a proviso that would subject "large, interconnected" firms to consolidated oversight by a special Financial Services Oversight Council—a prospect that, as commenter CoyoteBlue noted, sounds like nationalization. Here is the discussion of this idea from the working document (all typos mine):

We propose the creation of a Financial Services Oversight Council, chaired by Treasury, to help fill gaps in supervision, facilitate coordination of policy and resolution of disputes, and identify emerging risks in firms and market activities. This Council would include the heads of the principal federal financial regulators and would maintain a permanent staff at Treasury.

We propose an evolution in the Federal Reserve's current supervisory authority for BHCs to create a single point of accountability for the consolidated supervision of all companies that own a bank. All large, interconnected firms whose failure would threaten the stability of the system should be subjected to consolidated supervision by the Federal Reserve, regardless of whether they own an insured depository institution. These firms should not be able to escape oversight of their risky activivties by manipulating their legal structure.

Under our proposals, the largest, most interconnected, and highly leveraged institutions would face stricter prudential regulation than other regulated firms, including higher capital requirements and more robust consolidated supervision. In effect, our proposals would compel these firms to internalize the costs they could impose on society in the event of failure.

That doesn't necessarily imply nationalization, but there's a pretty severe issue of cartelization here. If all the too-big-to-fail firms are meeting, even for merriment and diversion, in cahoots with a special Treasury Department stovepipe organization, how can the conversation not end in a conspiracy against the public?

Shorter description, from Rep. Jeb Hensarling (R-Texas):

It's kind of like taking rotted wood and putting a fresh coat of paint on it—to some extent, it doesn't solve the problem and it can make make it worse by hiding flaws that lie underneath.

Here are some preliminary comments from President Obama: