The White House's proposed shakeup of the financial regulatory systems is a mixed bag, says CBS MoneyWatch.com editor-at-large Jill Schlesinger. She digs through the plan to see what makes sense and what doesn't.
>> Perhaps one of the few benefits of a financial meltdown is the change to reboot the regulatory process and start anew. Recently the Obama administration unveiled its proposals to improve financial system regulatory oversight. If enacted, the reforms would be the most sweeping since those that arose in the aftermath of the 1929 crash. Here to discuss some of the strengths and weaknesses of Obama's plan is MoneyWatch.com's editor-at-large, and my colleague, Jill Schlessinger assumed spelling. Hi Jill.
>> Hello.
>> Part of the idea here was to reboot the system, to streamline all the overlapping regulatory agencies that now exist. Did that happen?
>> That's the most disappointing part of the regulatory reform. That is that we went from having so many regulators to having just one less regulatory involved. We are getting rid of the OTS, the Office of Thrift Supervision. But they were the easiest dog to kick, they missed everything. You know, Indie Mac, AIG, you name it, that was in their portfolio. There still are so many regulators out there doing lots of different things. I think it's a little bit crowded, and there are probably too many chefs in that kitchen.
>> The Federal Reserve gets a lot more power. Are you in favor of that?
>> I think it does make sense. The Federal Reserve is going to be the systemic risk regulator. Which means that there's one body that is going to take a look at the entire financial regime, and say is any part of that structure at risk? And would it domino into other parts? So I think having one regulator involved in that does make sense. The fed is probably the most prominent and makes the most sense in this case.
>> And because the fed did such a good job last time.
>> Oh well, we're gonna overlook that this time.
>> There is one part of the plan that I know you like. And that is the provision that allows you to have a meeting with your stockbroker and finally use the F word.
>> Deep into the eighty-nine pages of regulatory reform, there is one section that mentions the F word. This is fiduciary. The reform is going to force all providers of financial advice to register as fiduciaries. What does that mean? It means anyone giving financial advice must put your interests before his or his firm's. It's a much stricter type of regulation than what was in place, which was called suitability. It's a welcome relief, it's the big win for consumers in this plan.
>> That's amazing. I'll bet an awful lot of people thought that that's what they, the kind of protection they had already.
>> Indeed. But now it's official, they have it.
>> All right, thanks Jill.
>> Thank you.
>> Thanks for watching, and you can hear more of Jill's thoughts on this subject, and many others on her blog, The Financial Decoder.
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