Markets Plan | General

THE 1787 PLAN OF ACTION

In a perfect world the markets would self-regulate. However, past economic events prove that even the free-est of markets demand boundaries. Adam Smith’s invisible hand — which would ideally guide market participants to contribute in a mutually beneficial way — is not foolproof when that hand is attached to a fool.

Luckily, it’s possible to strike an appropriate balance between risk-taking and recklessness. Sensible financial regulation gives the breathing room necessary for innovation, entrepreneurship and economic growth but, at the same time, prevents the catastrophic extremes that the free market can sometimes unleash.

We believe we have come up with sensible recommendations for financial regulation. Note: The first five recommendations are from the Federal Reserve Bank of Minneapolis' Plan to End Too Big to Fail (read the plan here):

(click on each to read more)

Fully understand and accept why "Too Big To Fail" remains a critical threat to the United States.

Significantly increase the minimum capital requirements for banks with $250 billion or more in assets.

Banks with $250 billion or more in assets either cease being systemically important or face the systemic risk charge.

Impose a tax on the borrowings of shadow banks with assets over $50 billion; 1.2% for those not systemically important.

Create a much simpler and less-burdensome supervisory and regulatory regime for community banks.

Champion and protect an independent Consumer Financial Protection Bureau.

Ensure that the derivative markets are transparent and assessed accurately. Measure by IFRS, not GAAP.

Prosecute financial crimes to the fullest extent of the law.

Enforce high standards and accountability for credit rating agencies and NRSROs.

Continue holding auditors accountable through strict enforcement by the Public Company Accounting Oversight Board (PCAOB).

Ensure that the Federal Reserve retains the ability to provide emergency liquidity & to buy Treasury bonds in a crisis.