US Treasury recently proposed highly anticipated Financial Regulatory Reform: A New Foundation. Here is the paper. New era is coming to Wall Street.
The reform focuses on the following five objectives:
I. PROMOTE ROBUST SUPERVISION AND REGULATION OF FINANCIAL FIRMS
II. ESTABLISH COMPREHENSIVE REGULATION OF FINANCIAL MARKETS
III. PROTECT CONSUMERS AND INVESTORS FROM FINANCIAL ABUSE
IV. PROVIDE THE GOVERNMENT WITH THE TOOLS IT NEEDS TO MANAGE FINANCIAL
V. RAISE INTERNATIONAL REGULATORY STANDARDS AND IMPROVE INTERNATIONAL
This likely will impact Wall Street and capitalism to be:
- more risk-averse; and well,
- less capitalistic.
Welcome to the new deleveraged, slower growth, more regulated era. It is unclear how and when this proposed reform will be implemented. This reform may pressure pure capitalists, risk takers and financial firms to consider moving out from US to other less-regulated countries. One thing is clear: significantly more-regulated era is coming to Wall Street.