While the Obama administration’s financial overhaul plan is headed in the right direction, it needs some refinement, said Gene Ludwig, CEO of Promontory Financial, a firm that tries to fix troubled banks.
“We have an alphabet soup of regulators,” he told CNBC on Monday. “The Obama plan starts us in the right direction by consolidating too, but the start has two flaws: one, the regulators inside the Treasury, which has a tendency to politicize it, and No. 2, it’s not comprehensive.”
Rather, the government should establish a comprehensive, independent council, he said, that regulates from prudential and consumer perspectives.
Ludwig also pointed out that a systemic look is different from institutional regulation.
“We want to make sure that the patient is not its own doctor,” he said. “Systemic problems have historically really been created by the government. And the Fed is part of that whole mix. So it can’t be its own doctor.”
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