Super Genius
Posts: 1,052 
Location: BC
Location: BC
April 29th, 2008, 09:35 PM
Treasury considers new ways for Fed to use powers
By Gillian Tett in London and Krishna Guha in Washington
Published: April 29 2008 23:23 | Last updated: April 29 2008 23:23
The Federal Reserve could use proposed new regulatory powers to try to stop credit and asset market excesses from reaching the point where they threaten economic stability, the US Treasury said on Tuesday.
David Nason, assistant secretary for financial institutions, said the Fed could even use its proposed “macro-prudential” authority to order banks, hedge funds and other entities to curtail strategies that put financial stability at risk.
By “leaning against the wind” in this way, the US central bank could “attempt to prevent broad economic dislocations caused by potential excesses”, he said.
His comments come amid debate inside the Fed as to whether it should try to do more to contain asset price bubbles, following the housing and dotcom busts. Some see enhanced regulatory powers as a better tool for this than interest rates.
The proposed new powers – outlined in a Treasury blueprint published last month – require legislation and may never be authorised. But policymakers see the plan as offering a template for future regulation.
The blueprint envisages giving the Fed roving authority to collect, analyse and publish market data from a wide range of institutions, from banks to hedge funds.
“The market stability regulator must have access to detailed information about all types of financial institutions,” said Mr Nason.
Hedge funds are uneasy about this proposal. However, many European central bankers are eager to acquire the kind of macro-prudential powers the Treasury would like to give to the Fed.
Meanwhile, data showed accelerating US house price declines and further declines in consumer confidence.
Source
So what I'm wondering and perhaps someone here knows, have the Chinese already started "advising" Washington on its finances? It sure sounds like it. I'm sure this wouldn't be very public but the Chinese do technically, as the largest investor in the USA, have the right to start making demands. This move seems like a very Chinese solution and a move away from corporatism.
Treasury considers new ways for Fed to use powers
By Gillian Tett in London and Krishna Guha in Washington
Published: April 29 2008 23:23 | Last updated: April 29 2008 23:23
The Federal Reserve could use proposed new regulatory powers to try to stop credit and asset market excesses from reaching the point where they threaten economic stability, the US Treasury said on Tuesday.
David Nason, assistant secretary for financial institutions, said the Fed could even use its proposed “macro-prudential” authority to order banks, hedge funds and other entities to curtail strategies that put financial stability at risk.
By “leaning against the wind” in this way, the US central bank could “attempt to prevent broad economic dislocations caused by potential excesses”, he said.
His comments come amid debate inside the Fed as to whether it should try to do more to contain asset price bubbles, following the housing and dotcom busts. Some see enhanced regulatory powers as a better tool for this than interest rates.
The proposed new powers – outlined in a Treasury blueprint published last month – require legislation and may never be authorised. But policymakers see the plan as offering a template for future regulation.
The blueprint envisages giving the Fed roving authority to collect, analyse and publish market data from a wide range of institutions, from banks to hedge funds.
“The market stability regulator must have access to detailed information about all types of financial institutions,” said Mr Nason.
Hedge funds are uneasy about this proposal. However, many European central bankers are eager to acquire the kind of macro-prudential powers the Treasury would like to give to the Fed.
Meanwhile, data showed accelerating US house price declines and further declines in consumer confidence.
Source
So what I'm wondering and perhaps someone here knows, have the Chinese already started "advising" Washington on its finances? It sure sounds like it. I'm sure this wouldn't be very public but the Chinese do technically, as the largest investor in the USA, have the right to start making demands. This move seems like a very Chinese solution and a move away from corporatism.
Bright Spark
Posts: 316
Location: California
Location: California
May 7th, 2008, 03:39 AM
I hope every US citizen pays attention to the facts surrounding the current fiscal crisis. The FED is a quasi private tool used by the White House as the Puppet Stage. Right now "Big Ben" is on stage and he won't offer any real solutions to help the working person in the US. The only substantial help coming is to improve the cash flow problems faced by the Banking and Mortgage industries. Bernanke is another one dancing to the Bush/Cheney quartet which makes terrible music. I don't think we've seen the worst of the situation yet.
I hope every US citizen pays attention to the facts surrounding the current fiscal crisis. The FED is a quasi private tool used by the White House as the Puppet Stage. Right now "Big Ben" is on stage and he won't offer any real solutions to help the working person in the US. The only substantial help coming is to improve the cash flow problems faced by the Banking and Mortgage industries. Bernanke is another one dancing to the Bush/Cheney quartet which makes terrible music. I don't think we've seen the worst of the situation yet.
Super Genius
Posts: 1,052
Location: BC
Location: BC
May 7th, 2008, 09:03 AM
Last year China threatened to sell off their treasury securities but decided against it at the last minute. This made me wonder what kind of deal had been struck. Along with the Fed reforms which expands power the treasury wants to restrict capitol in other ways. It all just seems very un-American to me and reminiscent of the New Deal which conservatives are usually openly hostile about. It also seems odd in that the current crises, while irritating, is hardly disastrous when viewed over time, the USA has been in much worse condition in terms of their GDP to debt ratio; mind you, they didn't have the huge trade deficit, still non of this really warrants the kind of reforms being currently proposed IMO. It very much looks like some countries are trying to protect their investment in the US by forcing some very non-neocon policies.
I don't think the interesting times are over by any means.
Last year China threatened to sell off their treasury securities but decided against it at the last minute. This made me wonder what kind of deal had been struck. Along with the Fed reforms which expands power the treasury wants to restrict capitol in other ways. It all just seems very un-American to me and reminiscent of the New Deal which conservatives are usually openly hostile about. It also seems odd in that the current crises, while irritating, is hardly disastrous when viewed over time, the USA has been in much worse condition in terms of their GDP to debt ratio; mind you, they didn't have the huge trade deficit, still non of this really warrants the kind of reforms being currently proposed IMO. It very much looks like some countries are trying to protect their investment in the US by forcing some very non-neocon policies.
I don't think the interesting times are over by any means.
