Sunday, June 28, 2009

Summary: A Unified Bank Regulator is a Good Start

We know you're busy people with a lot to read. Below we've summarized Jamie Dimon's article from yesterday's wall street journal.

...
I especially support the creation of a single bank regulator, which is long overdue.
...
We now know that "once-in-a-generation" swings in the business cycle are anything but. All financial institutions, wherever they're regulated, must stand ready with strong capital reserves to serve as a cushion during times of unexpected market and economic difficulties.
...
In a similar vein, regulatory oversight must extend to sectors of the financial system that have long fallen outside the scope of any agency.
...
Providing greater oversight and transparency for key markets, including derivatives, is another vital step.
...
As we adopt these sweeping changes, we must also be cognizant of the danger of the pendulum swinging too far.
...
For that to happen, there are a number of key conditions that must be met. First, we must preserve the ability to innovate and to steer capital toward the most promising innovations. This does not mean a return to overly complex financial instruments. It does mean creating sufficient space for the responsible development of products and services that meet the needs of a fast-changing market.

Ensuring the ability to innovate is also fundamental to U.S. competitiveness.
...
Second, any regulatory overhaul should ensure that governmental oversight of the financial system is efficient.
...
Third, the financial system must be in position to provide consumers with credit on reasonable terms.
...
Before creating an entirely new federal bureaucracy, policy makers should first examine ways to strengthen and refocus the authority of existing regulators.
...
Finally, no discussion of the future of the financial system can be complete without an acknowledgment of the industry's responsibility to re-earn the trust of the American people.
...

Above all, no matter what the regulatory framework is, it means recognizing that our accountability is not only to our shareholders, customers and employees, but also to the broader public
...
The steady restoration of stability is an important step forward for the financial system and the economy. By instituting needed changes in how financial institutions operate and are regulated, I'm confident that the system will once again play its vital role, efficiently and safely providing the capital and credit upon which our nation's economic growth depends.