Flanked by lawmakers of both parties, President Obama enumerated the guiding principles behind a revamped regulatory structure for financial services industry. While not singling out the insurance industry, the plan seems to foreshadow an increased amount of regulatory vigilance at the federal level.
“Let me be clear: The choice we face is not between some oppressive government-run economy and a chaotic and unforgiving capitalism,” Obama said. “Rather, strong financial markets require clear rules of the road, not to hinder financial institutions, but to protect consumers and investors, and ultimately to keep those financial institutions strong. Not to stifle, but to advance competition, growth and prosperity. And not just to manage crises, but to prevent crises from happening in the first place, by restoring accountability, transparency and trust in our financial markets. These must be the goals of a 21st century regulatory framework that we seek to create.”
Not surprisingly, considering the role of interrelated risks in the financial services meltdown, curbing systemic risk topped the President’s list, which follows below:
1. Enforce strict oversight of financial institutions that pose systemic risks
2. Strengthen markets so they can withstand both system-wide stress and the failure of one or more large institutions
3. Encourage our financial system to be open and transparent, and to speak in plain language investors can understand
4. Supervise financial products based on "actual data on how actual people make financial decisions"
5. Hold market players accountable, starting at the top
6. Overhaul our regulations so they are comprehensive and free of gaps
7. Recognize that the challenges we face are global
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