Financial Reform’s Breakthrough Year
21 December 2012
ZANZIBAR – Here’s an odd prediction for the coming year: 2013 will be a watershed for financial reform. True, while the global financial crisis erupted more than four years ago, and the Dodd-Frank financial reforms were adopted in the United States back in 2010, not much has changed about how Wall Street operates – except that the large firms have become bigger and more powerful. Yet there are reasons to expect real progress in the new year.
Under Dodd-Frank, it is arguably easier for the FDIC to handle the failure of a single large financial institution than it was in pre-Dodd-Frank days. But what if two or three or seven firms are all in trouble at the same time?
Creating a common supervisory authority will mean nothing unless it can clean up the mess created by the existing supervisors. And that cleanup will expose more of the rot in banks’ current operations.