by Jan Dennis, Illinois News Bureau
Editor’s note: President Obama has proposed new, far-reaching regulations that would affect nearly every phase of banking and the financial markets, seeking to avoid a repeat of the financial meltdown that resulted in the nation’s deepest economic downturn since the Great Depression. Charles Kahn, a finance and economics professor who chairs the finance department, discusses the historic overhaul in an interview with News Bureau Business & Law Editor Jan Dennis.
What do you think of the sweeping new regulations for the nation’s financial system proposed by the Obama administration?
New legislation so far, on credit cards in particular, is pretty mild. The biggest changes are likely to be an outgrowth of the U.S. Treasury’s white paper on financial regulatory reform, issued a couple of weeks ago. It’s largely a statement of principles: Details are still to be filled in. But on the whole, the program makes a lot of sense. The main theme is the focus on systemic risk: the problems that arise when a crisis in one financial institution or market spills over into other parts of the economy. There’s a lot of concern with large, complex financial institutions, the ones often described as “too big to fail.” Now, there will be oversight over these institutions as a whole, beyond the current piecemeal regulatory oversight over their various components. There’s also attention paid to the markets and institutions that can transmit financial disruptions