Reg restructuring plans outlined by Geithner, Summers

WASHINGTON (6/16/09)--Treasury Secretary Timothy Geithner and National Economic Council Director Lawrence Summers in a Monday op-ed in The Washington Post said that the Obama administration's upcoming financial regulatory reform plan would offer enhanced protections to investors and consolidate some aspects of the financial oversight process under a council of multiple regulators.

The administration representatives said the plan, set for release on Wednesday, seeks to impose new reporting standards on creators of asset-backed securities, and would require the creators of any securities to maintain a financial stake in that asset. Regulations covering futures would also be harmonized with those covering securities. Oversight of so-called "over the counter" derivatives would also be strengthened.

The regulatory reforms would increase the existing capital and liquidity requirements for financial institutions and cluster existing regulators together to, under the supervision of the Federal Reserve, oversee larger interconnected financial firms. Capital and liquidity requirements for larger firms would also be higher under the plan.

Additionally, the reforms would create new guidelines to help the government resolve any future failures of large financial institutions without bailing them out or simply letting them collapse.

The U.S.-based regulators would also work alongside their foreign counterparts to strengthen financial regulations throughout the world's markets.

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