Treasury Secretary Henry Paulson debuted his proposal for a new regulatory system for the financial markets Monday, and CNBC asked the experts to weigh in.
Schumer: It’s a Foundation
“I think it is a very good foundation. First to regulate mortgage brokers makes imminent sense. Some of us have been calling for that for eight months. Mortgage bankers are regulated; they can’t sell a mortgage that someone can’t afford. Mortgage bankers that were developed over the last few years are the ‘Wild West’ of this whole thing and they need to be regulated. Far more fundamentally, our system of financial regulation is in the ‘30s, our world financial system is in the 21st century, and the former has to catch up with the latter. And Paulson’s beginning is very, very good. It’s a foundation— to consolidate regulators makes imminent sense."
- Senator Charles Schumer, (D) New York
Good as First Step
“I think the secretary’s plan is a good first step. I think the more you can have a single regulator, the better ... frankly you get the core competency in a single place, and also [that's] obviously easier for business. But I don’t think we should ignore that there’s — I think — a big debate on a more fundamental issue: What went wrong?”
- Ed Clark, Toronto Dominion Bank CEO
Who's in Charge Here?
“We have the Federal Reserve creating a policy at the start of this decade to encourage people to leverage up on the housing, to leverage up on financial assets. Now they are working on one purpose, with somebody else — the SEC or Treasury — working on a cross purpose … And, if you put them together under one roof ... who's in charge? What happens when you get the bureaucratic infighting over which policy, and who is accountable for that policy? We’ve had major disaster areas in the history of regulation that stemmed directly from regulatory bureaucratic infighting. I don’t want to see it here.”
- Howard Simons, Bianco Research
Does the Fed Really Deserve More Responsibility?
“They had to do something. As David said, it’s early innings. Barney Frank and others will make big, big changes. There have to be more teeth from a regulatory standpoint. But, let me do a quick Jim Cramer rant on one thing that sort of confuses me. The Fed gets more responsibility? Are they being rewarded for how they performed in the last year? They missed the subprime crisis in August. They were the regulators who were supposed to stop all this predatory lending. This is like putting Eliot Spitzer in charge of the morals division.”
- Greg Valliere, Stanford Financial Group