Obama Revamps Financial Regs

On Wednesday, President Obama outlined a comprehensive plan for regulatory reform to oversee all aspects of mortgage lending, including the omission of the Office of Thrift Supervision (OTS).

During the unveiling of the plan, Obama said the plan was a “response to an historic economic crisis.”

The plan was adapted due to the crumbling of major financial institutions and the lack of responsible regulatory guidelines which has been blamed for the current economic crisis.

The current regulatory provisions, dating back to the Great Depression, were bombarded by the “speed, scope, and sophistication” of an assortment of new and complex financial instruments.

The new initiative will empower the Federal Reserve to regulate bank-holding companies and other large institutions.

“We do not have any effective system in place to contain the failure of an AIG and the largest and most interconnected financial firms in our country,” the President said.

“That is why, when this crisis began, crucial decisions about what would happen to some of the world’s biggest companies — companies employing tens of thousands of people and holding trillions of dollars in assets — took place in emergency meetings in the middle of the night.”

Under the new plan, more stringent requirements for capital and liquidity would be required for these systemic companies.

“And we will require the originator of a loan to retain an economic interest in that loan, so that the lender — and not just the holder of a security, for example — has an interest in ensuring that a loan is paid back,” Obama said.

Phil Ganz (354 Posts)

Philip D. Ganz is a Boston Mortgage Broker and Boston Home Loan specialist. For information, expertise, consulting, or advice about home loans, refinancing mortgages, or commercial property loans, contact Phil with no obligation: 617-529-9317


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