here's the US Treasury Dept. document:
i'm just reading it, and this strikes me as odd:
"The build-up of risk in the over-the-counter (OTC) derivatives markets, which were
thought to disperse risk to those most able to bear it, became a major source of contagion
through the financial sector during the crisis." p.6
how does leveraging the debt of poor households 'disperse risk'?
this statement does not make sense to me whatsoever.
unfortunately the usefulness of the whole set of proposals rests on the analysis of the problem, and it seems they've missed the mark.
even if they use a new agency to make sure consumers/ low income persons aren't duped to take on more than they can afford (mortgages/loans), still the proposals aren't addressing the fact that the entire financial system is an upside-down pyramid balanced with it's diamond tip poised and crushing the weakest link in the chain.
how exactly is that 'dispersing risk'? seems more like its focussing risk. like a magnifying glass in the sun on an ant.
also there are big questions around giving the Federal Reserve more powers- the Federal Reserve system, though it has a nice public-sounding name, is made up of banks which are privately owned. The relationship between the Federal Reserve and the Treasury Dept. isn't really clear in the document, which describes a new oversight agency with a Treasury chair and using staff to be housed at Treasury, but not how this agency will relate to the Federal Reserve in a useful way- sounds like giving the fox more run of the henhouse.
anyway, i'll keep reading it for a bit. if others have thoughts, pls share.