Professor Supports Financial Reforms

The worst financial crisis since the Great Depression of the 1930s has ignited a big reform process.The proposed reforms would grant significant new powers to the Federal Reserve and the Treasury Department.They would touch every aspect of the financial services industry.The Federal Reserve would be in charge of systemically important firms,which would have to hold more money in reserves to cover losses.There would be supervision of derivatives.Consumer financial protection would be provided by a new agency.Laura Tyson,a professor at the UC Berkeley Haas School of Business,says she thinks the proposed reforms would addree many of the sources of the financial trouble in the world.They actually fill gaps and address systemically important institutions,whether banks or non-banks.I agree that consumer products and financial services are increasingly difficult to understand,Dr.Tyson said.One of the things we have learned is there are institutions taht pose systemic risk.Having a person who supervises them makes sense.The Federal Reserve and Treasury have been working together in this crisis.You're gonna have to have this kind of partnership,Dr.Tyson feels.