President Expected to Propose Sweeping Financial Regulation Changes

In a few hours, President Obama is expected to propose substantial changes to the financial regulatory landscape according to several press reports. According to AP, "The president was to detail the administration's overhaul plan on Wednesday, recommending new powers for the Federal Reserve; a new consumer protection agency to govern lending and credit; and new rules that would reach into currently unregulated regions of the financial markets."

This could spell substantial uncertainty for the banking and other financial sectors. One thing is certain, though. Mankind will always find a way to exploit opportunities. Those who call this the death of the industry are short sighted. Somewhere, somehow, in a backroom, someone is coming up with a novel idea that will initially make sense and then be abused by the masses.

The big presupposition here is, of course, that the President has the votes in Congress to pass such legislation. That much isn't certain. Until we see the details, anything we could add would be nothing more than idle speculation. If the reports of higher equity capital requirements are true for hedge funds and proprietary trading vehicles, that would be good for society.