ML-Implode News - Volcker urges sweeping regulatory reform

"We urge Congress, the administration, existing regulatory agencies, and financial institutions themselves to step up to the needed debate and set out an agreed framework for reform suitable for the 21st Century," said Volcker, the founder and chairman of the Volcker Alliance, a nonpartisan, nonprofit organization.
The system for regulating financial institutions in the United States is "highly fragmented, outdated, and ineffective," said the group's new report, "Reshaping the Financial Regulatory System," which was released at a National Press Club event.

The plan urges lawmakers to establish an oversight group, run by the Federal Reserve, with responsibility for all significant financial reform.
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A major change the Volcker report advocates is combining the Securities and Exchange Commission, the main regulator of securities, and the Commodity Futures Trading Commission, which oversees futures and options, into a new regulator designed to better protect investors.

Other key suggestions from the report include establishing a new independent agency, the Prudential Supervisory Authority, that has a strong link to the Federal Reserve, and moving the Office of Financial Research out of the Treasury Department.

The slight flaw we find in this is that it still puts the Fed in charge -- in fact, even moreso. But the Fed is the main agitator in creating serial credit bubbles, and being structurally blind to regulatory reforms and enforcement that needs to be applied, when it needs to be applied (in other words, the Fed itself is "pro-cyclical", when an institution that is capable of being counter-cyclical is needed).

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Volcker urges sweeping regulatory reform