From the perspective of an outside observer, the debate over financial regulatory reform can seem like nothing more than the typical Beltway chatter full of shrill voices and political posturing. While the current debate is not free of the usual nonsense, it is important to note that the discussion has at least refocused on the “too big to fail” problem rather than fixating on consumer protection issues that consumed a great deal of time last year. There is nothing wrong with inquiries into whether credit card and overdraft fee regulations should be changed, but action in such areas will do nothing to prevent the next financial meltdown. Read this article for more information on a proposal to “bail in” banks in the event of a crisis.
There has been much debate recently regarding the need for a “systemic risk regulator” empowered with the ability to take corrective action to prevent the types of dangerous episodes that have become the norm over the past year. Read this article for a suggestion from Sen. Mark Warner for a systemic risk council.