Financial Regulatory Reform - A New Foundation: Rebuiding Financial Supervision and Regulation docx

[...]... and will propose any changes to the governance and structure of the Federal Reserve that are appropriate to improve its accountability and its capacity to achieve its statutory responsibilities C Strengthen Capital and Other Prudential Standards Applicable to All Banks and BHCs 1 Treasury will lead a working group, with participation by federal financial regulatory agencies and outside experts, that... facilitate information sharing and coordination among the principal federal financial regulatory agencies regarding policy development, rulemakings, examinations, reporting requirements, and enforcement actions; • provide a forum for discussion of cross-cutting issues among the principal federal financial regulatory agencies; and 20 Financial Regulatory Reform: A New Foundation • identify gaps in regulation. .. importance of a simpler, more transparent measure of leverage for banks and BHCs to supplement the risk-based capital measures As a general rule, banks and BHCs should be subject to a risk-based capital rule that covers all lines of business, assesses capital adequacy relative to appropriate measures of the relative risk of various types of exposures, is transparent and comparable across firms, and is... subsidiary depository institutions “well-capitalized” and “well-managed” in order to qualify as a financial holding company (FHC) and thereby engage in riskier financial activities such as merchant banking, insurance underwriting, and securities underwriting and dealing The GLB Act does not, however, require an FHC to be “well-capitalized” or “well-managed” on a consolidated basis As a result, many of... review process and work with partners in the Financial Action Task Force (FATF) to address jurisdictions not complying with international anti-money laundering/terrorist financing (AML/CFT) standards J Improve Accounting Standards 1 We recommend that the accounting standard setters clarify and make consistent the application of fair value accounting standards, including the impairment of financial instruments,... of Global Financial Markets We urge national authorities to promote the standardization and improved oversight of credit derivative and other OTC derivative markets, in particular through the use of central counterparties, along the lines of the G-20 commitment, and to advance these goals through international coordination and cooperation C Enhance Supervision of Internationally Active Financial Firms... the capital review recommended previously in this report 5 The accounting standard setters – the Financial Accounting Standards Board (FASB), the International Accounting Standards Board (IASB), and the SEC – should review accounting standards to determine how financial firms should be required to employ more forward-looking loan loss provisioning practices that incorporate a broader range of available... of a single set of high quality global accounting standards K Tighten Oversight of Credit Rating Agencies We urge national authorities to enhance their regulatory regimes to effectively oversee credit rating agencies (CRAs), consistent with international standards and the G-20 Leaders’ recommendations.  18 Financial Regulatory Reform: A New Foundation I PROMOTE ROBUST SUPERVISION AND REGULATION OF FINANCIAL. .. result, many of the BHCs that were most active in volatile capital markets activities were not held to the highest consolidated regulatory capital standard available We propose that, in addition to the current FHC eligibility requirements, all FHCs should be required to achieve and maintain well-capitalized and well-managed status on a consolidated basis The specific capital standards should be determined... unsophisticated parties 13 Financial Regulatory Reform: A New Foundation C Harmonize Futures and Securities Regulation The CFTC and the SEC should make recommendations to Congress for changes to statutes and regulations that would harmonize regulation of futures and securities D Strengthen Oversight of Systemically Important Payment, Clearing, and Settlement Systems and Related Activities We propose that the . complacency among financial intermediaries and investors. Financial challenges such as the near-failure of Long-Term Capital Management and the Asian Financial. international standards and the G-20 Leaders’ recommendations. 18 Financial Regulatory Reform: A New Foundation I. PROMOTE ROBUST SUPERVISION AND REGULATION