Since applying the Stimulus Package 8 months ago, Obama has seen financial markets rebound. But there is still strong resistance to the needed changes. There is still evidence of continuous unchecked excesses and the reckless behavior that created the stock market crash. This is unacceptable and a detriment to full recovery. As a result, he proposed new consumer protections, closing loopholes in the regulatory system and gaps between countries.
Rules for Consumer Protection
President Obama pointed out the fact that there needs to be more accountability in the market, and that reform is eminent. The biggest regulatory reform since the Great Depression will address consumer protection. Unwary consumers should not be tricked into hidden fees, taking on more than they can pay for, being cheated by slick deals and buying what I call a 'pig in a poke'.
Hiring the fox to guard the hen house is a recipe for disaster. The idea that the market can regulate itself has proven to be a really rotten idea. The market did not regulate and protect itself. It self-destructed taking the rest of the country with it. That is why Obama wants regulation.
Obama is requiring legislation to set up a regulatory system to provide oversight for the financial firms, to close loopholes in the rules and require accountability. Just as banks have the FDIC to monitor and back them up, the financial markets must have their own resolution authority. Plus the Federal Reserve will be given more power and ability to provide oversight.
Reform of the Global Financial System
Obama wants to close the gaps between countries to reform the global financial system. This he will be addressing at the upcoming G20 summit. He will be asking for stronger capital standards, expanded trade and trade agreements and enforcement of trade agreements already made.
President Obama believes that regulatory reform is the job government is best suited for. And that is exactly what the new legislation will do. The government will provide the good rules which were lacking in the industry, some of which were actually done away with. The government agencies providing oversight will be set up to provide ways in which responsibility and trust can be restored to the financial markets. Some examples of regulatory reform Obama mentioned were that shareholders will be given the right to vote on CEO bonuses and wages and Pay As You Go in which in the long term, financial stability under any circumstances must be linked to ways that pay for themselves.
These proposals for reform, these common sense rules of the road must take into account the long term interests of the entire system. The new regulations will protect consumers, the markets, the institutions and the entrepreneurial spirit of American business ventures. If the financial industry choose to continue their reckless behavior and unchecked excesses they will only damage themselves, as has been shown.
Obama called upon the financial world and American business to search for a better way. Will American capitalism continue its search for the excellence in business practices that Americans were once proud of? Or will they continue to self-destruct?