Today, the Congressional Oversight Panel released a report – mandated by Congress – making recommendations on how to reform our financial regulatory system. In the report, the panel summarized:
Modern financial regulation can provide consumers and investors with adequate information for making sound financial decisions and can protect them from being misled or defrauded, especially in complex financial transactions. Better regulation can reduce conflicts of interest and help manage moral hazard, particularly by limiting incentives for excessive risk taking stemming from often implicit government guaranties. By limiting risk taking in key parts of the financial sector, regulation can reduce systemic threats to the broader financial system and the economy as a whole. Ultimately, financial regulation embodies good risk management, transparency, and fairness.
Watch video of Chair Elizabeth Warren introducing this report below:
The report examines how deregulation of financial markets over the last twenty-five years have returned the boom-and-bust cycles that had plagued the United States' economy until reforms of the Great Depression ushered in a half-century of financial stability. The report specifically points to three areas of regulation that could have prevented the current economic crisis, specifically basic consumer protection rules, supervision of credit rating agencies, and regulation of companies that are “too big to fail.”
Speaker Pelosi on the report:
The Congressional Oversight Panel’s report further exposes the current regulatory system’s failure to oversee financial markets in a way that protects the interests of the American people. Congress will closely examine the report’s valuable recommendations.
Regulatory reform is a top priority because we have an obligation to ensure effective financial market oversight and to protect the American people against unbridled Wall Street greed. I will work with President Obama, Financial Services Committee Chairman Barney Frank, and our colleagues to better protect Americans from predatory lending and to restore confidence and the long-term stability to the financial markets.
Read summaries of reports examined by Congressional Oversight Panel members in preparing the report: