President Obama today announced a wide-ranging package of regulatory reform proposals that would authorize the creation of a new council charged with monitoring the activities of financial firms to assess whether they pose a threat to the financial system.
Also under the Obama administration's reform proposals, hedge funds, private equity firms, venture capital funds and others with assets exceeding “some modest threshold,” would be required to register with the SEC, according an 88-page paper issued by the Treasury today outlining the key legislative proposals in the president's reform package. “The advisers should be required to report information on the funds they manage that is sufficient to assess whether any fund poses a threat to financial stability,” it said.
The new council — the Financial Services Oversight Council — would be chaired by Treasury Secretary Timothy Geithner and include representatives from the Federal Reserve, the SEC, the FDIC and other federal agencies, according to the Treasury Department's paper.
The council would have the authority to “gather information from any financial firm” and require “periodic and other reports” to assess the “extent to which a financial activity or financial market in which the firm participates poses a threat to financial stability,” the report said.
Firms that the council believes present a systemic risk could be subject to regulatory oversight by the Federal Reserve, which also would receive dramatically enhanced regulatory powers under the Obama administration's proposals including the right to impose enhanced capital, liquidity and risk-management requirements on firms it oversees.