“President Obama’s proposals for reform of American financial institutions and products advance the Caux Round Table’s proposals for preventing future financial crises,” said Stephen B. Young, Caux Round Table Global Executive Director.
Young added that in September 2008 as financial institutions were in full meltdown, the Global Governing Board of the Caux Round Table proposed a seven point reform plan to respond to this failure of financial capitalism.
Three of the seven CRT proposals called for higher standards to be applied to boards of directors and three more called for realignment of executive remuneration, control of systemic risk and better regulation of financial market instruments and a final recommendation pointed to better international supervision of financial markets.
The Obama Administration has proposed reducing systemic risk accumulation for the financial system by:
- creating a new financial services oversight council to identify emerging systemic risks
- new authority for the Federal Reserve to supervise all firms that could pose a threat to financial stability
- stronger capital and other prudential standards for all financial firms
- registration of advisors to hedge funds and other private pools of capital
The Obama Administration has proposed better regulation of financial market instruments as follows:
- enhanced regulation of securitization markets with more transparence, stronger regulation of credit rating agencies, and a requirement that issuers and originators retain a financial interest in securitized loans
- comprehensive regulation of over the counter derivatives
- protect consumers of financial products from abuse with a new Consumer Financial Protection Agency
"These welcome proposals by the Obama Administration go far in the direction recommended by the CRT and, happily, vindicate CRT analysis and concerns over what went wrong with Wall Street,” said Young.