NYT: Geithner Calls for Major Overhaul of Financial Rules
Started by alanhart
about 17 years ago
Posts: 12397
Member since: Feb 2007
Discussion about
The government would have the power to peer into the inner workings of companies that currently escape most federal supervision — insurance companies like the American International Group, multibillion-dollar hedge funds like the Citadel Group and private equity firms like the Carlyle Group or Kohlberg, Kravis & Roberts. If regulators decided that a company had become “too big to fail,” as was... [more]
The government would have the power to peer into the inner workings of companies that currently escape most federal supervision — insurance companies like the American International Group, multibillion-dollar hedge funds like the Citadel Group and private equity firms like the Carlyle Group or Kohlberg, Kravis & Roberts.
If regulators decided that a company had become “too big to fail,” as was the case with A.I.G. in September, they would subject it to much stricter capital requirements than smaller rivals and much closer scrutiny of its borrowing levels and its trading partners, or counterparties.
[more]
http://www.nytimes.com/2009/03/27/business/economy/27regulate.html?_r=1&hp
I doubt this one will have any teeth (if it's even made real), but will this cause fragmentation of these businesses into many (that aren't "too big to fail")? And if so, would that be good or bad for NY?
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Response by waverly
about 17 years ago
Posts: 1638
Member since: Jul 2008
I think this could cause some untis to spin-out, but not becasue of regulatory issues. I think they would spin-out to separate them from under-performing units that may require government aid, which would them limit the compensation that could be doled out to those in stronger perfroming lines of business.
I also think the focus on new regulatory requirements (hedge funds being registered with SEC, third-party audits of broker-dealers and funds, credit default swaps being traded and cleared through a central exchange) are all good things for the economy and for the jobs situation. There will be more jobs created for government regulators, internal auditors, Sarbanes-Oxley professionals within these newly registered hedge funds and also in the big consulting firms like the Big 4 and Protiviti. This new regulation will also cause more people to put the money they pulled out of the market in the 4th quarter of 2008 back into the industry as well.
I think this could cause some untis to spin-out, but not becasue of regulatory issues. I think they would spin-out to separate them from under-performing units that may require government aid, which would them limit the compensation that could be doled out to those in stronger perfroming lines of business.
I also think the focus on new regulatory requirements (hedge funds being registered with SEC, third-party audits of broker-dealers and funds, credit default swaps being traded and cleared through a central exchange) are all good things for the economy and for the jobs situation. There will be more jobs created for government regulators, internal auditors, Sarbanes-Oxley professionals within these newly registered hedge funds and also in the big consulting firms like the Big 4 and Protiviti. This new regulation will also cause more people to put the money they pulled out of the market in the 4th quarter of 2008 back into the industry as well.