WASHINGTON (AP) – Former Federal Reserve Chairman Paul Volcker is calling for a reshaping of the U.S. financial oversight regime, which he says is splintered and ineffective.
A public policy group led by Volcker issued a report Monday on the regulation of banks and Wall Street. It says the array of government agencies that oversee the financial system has changed little since the Depression-era 1930s and can’t keep up with a fast-moving industry. It calls for a simpler setup.
Under the Volcker Alliance’s recommendations, the Federal Reserve would keep primary responsibility for financial stability. However, authority shouldn’t be “overly concentrated” in one agency, the group maintains. A new, independent Prudential Supervisory Authority would assume the oversight functions now exercised by the Fed, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp. for banks, and by the Securities and Exchange Commission and the Commodity Futures Trading Commission for brokerage firms, money market funds and futures dealers.
The SEC, the primary regulator of the securities markets, and the CFTC, which oversees futures and options markets and exchanges, would be merged together.
“Failure to reorganize the regulatory structure will contribute to the buildup of systemic risk and make us more vulnerable to the next financial crisis,” the report says.