The Government Accountability Office
urged
President-elect Barack Obama Thursday to immediately consider revamping
the financial regulatory structure, as the congressional watchdog added oversight of financial institutions and markets to its list of
13 urgent issues facing the 44th president.
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"The current crisis facing the nation's financial markets dramatically
illustrates the ineffectiveness of the regulatory system in overseeing
the increasing complexity of U.S. markets, institutions, and products
that have rapidly evolved over the last 30 years," the GAO said.
While 1999's nail in the coffin for Depression-era regulation Glass Steagall is often cited as a pivotal moment in banking history, changes to the financial system indeed began years before. Some other changes over the last 30 years include the ubiquity of ATMs and interstate banking; introduction of Internet banking and brokerage; the growth of hedge funds, private equity and other alternative assets; and the explosion in derivatives and other exotic financial instruments.
The
nonpartisan agency added that the current system was developed in a
"piecemeal fashion" in response to these changes and other financial crises and currently
lacks the comprehensive framework needed in today's complex global
marketplace.
The GAO said it plans to issue a report in January
2009 that can be used to help create a new system of regulation and to
evaluate regulatory proposals that emerge. -
Donna Block
