Banks, already way long on deposits, will end up paying even lower rates as funds flood in if money market mutual funds are forced to use floating net asset values.
If the FSOC fails to get the SEC to adopt new standards, it could look weak. If it succeeds, this mechanism will be used more often. Either way, the intervention is likely to sow division among regulators.
Boosting regulatory oversight of Wall Street firms will better allocate examiner resources to the riskiest financial firms and help reduce unnecessary burdens on community banks.
Labeling a firm "systemically important" will tip the competitive scales one way or the other - to no purpose, since the exercise is premised on a misunderstanding of the 2008 financial crisis.
The oft-mischaracterized HUD rule will discourage any race-based decision making and minimize lawsuits. Why would any lender want to continue a practice with a discriminatory effect but no business objective?
Due to continuing struggles within global economies, the interconnected financial framework requires higher levels of capital, liquidity and investments in assets that can objectively be considered safe.
Most of the losses banks have caused and suffered could be greatly reduced or eliminated without relying on complex regulations and elaborate risk management. Just promulgate and enforce one simple rule: we tolerate no lying.
New regulations fail to address the next wave of dubious practices sure to emerge and sully the reputation of responsible lenders. Remember: The Maginot line held; new technology just allowed forces to go around it.
