July 22nd, 2015
In principle one can think are two interesting steps though it will have to see in practice the power that is granted to that it is transformed into container elements of risk. In this sense, if for example, these bodies only warn about risks, may in the economic booms are not very taken into account. This is what happened to the same Alan Greenspan who acknowledged that they had warned him about the risks of subprime but who underestimated them. It will be necessary to ensure that these agencies have an appropriate level of flexibility so that they can adapt to the evolution of the financial instruments that will emerge with higher levels of complexity in their engineering. Where the complexity level achieved by the new instruments is unattainable for understanding risk this would more diffuse value of such bodies. Other two measures directly aimed at financial institutions and that will limit the envelope expansion of the financial system.
He demand a higher level of additional capital before an increased risk and compel the entities that maintain a certain percentage of mortgage loans that generated, will limit the multiplication of the volume of business of these entities. In this sense, the regulation must find balance not be extreme to the point of limiting the generation of financing in excess. This reform brings further bad news for risk rating agencies since it contemplates measures to avoid conflicts of interest. During the crisis, rating agencies that were responsible for evaluating the quality of new assets benefited with its growth, and it is therefore that if possible, skipped any element that could affect your rating and your own business. On the other hand, it is good to look for generating greater transparency in the market although experience shows that this goal is difficult to achieve. The Obama Government proves with this reform that he learned the dangers of the financial system. Greater control over exotic markets and debt markets, is what also comes with reform. Balance, regulation and free market, and a higher level of coverage of the financial system are the objectives of the proposal in reform. Also one no less than the reform target is inserted into the structure of regulation and international supervision. The proposal sounds interesting, but first to trust, better to see it in operation.