This article was originally published by the Fiscal Times on Monday, May 24, 2010.
Financial regulation legislation silent on key issues.
By Katherine Reynolds Lewis
The Senate's action last week to discourage high-risk behavior and regulatory failures has been hailed as the most sweeping reform of the banking and financial system since the 1930s, yet the landmark legislation leaves huge gaps in addressing the causes of the 2008 financial crisis, according to analysts and experts.
Most notably, the Senate-passed bill doesn't address the future of Fannie Mae and Freddie Mac, the mortgage giants at the center of the credit market collapse, which hold $5.5 trillion of residential housing loans, about three-quarters of the market. Nor does the massive, 1,500-page bill establish comprehensive regulation of insurance companies, such as American International Group. Instead, the bill would create an insurance office at the Treasury Department merely to collect data from state insurance regulators.
Banking Bill Leaves Huge Gaps in Financial Reform
Obama Administration Speeds Up Hiring
This article was originally published by the Fiscal Times on Tuesday, May 11, 2010.
The Obama administration has ordered sweeping changes to speed up the federal hiring process and to make it less frustrating to apply for a job.
By Katherine Reynolds Lewis
The Obama administration implemented sweeping changes to the federal hiring process Tuesday to make it easier and faster to hire new government employees. Following years of complaints that federal hiring practices were hopelessly mired in red tape and bureaucratic delays, the change is expected to reduce by half the time it takes to fill vacancies and enhance the government’s ability to compete with the private sector for strong talent.
Under the old method, the hiring process took an average of five months, with as many as 40 individual steps and 19 signatures needed, said John Berry, director of the Office of Personnel Management, in unveiling the changes. The overhaul eliminates required knowledge skills assessment essays, which will allow people to apply for a job with a simple cover letter and resume, saving millions of hours and getting rid of cumbersome paperwork. "This initiative is the biggest step forward for fixing federal hiring in over three decades," Berry said. "It will substantially reduce the time and aggravation it takes to find and hire the best. When we've achieved that goal, all of government will work better."
Each year, the federal government adds about 330,000 employees to its 2 million person workforce, through a process that has long been criticized as byzantine and cumbersome by lawmakers, according to the Government Accountability Office and academics. Streamlining hiring will save time and money, and result in better talent, Berry told an audience of government employees, managers and journalists.
"Mounting deficits and debt are placing enormous pressure on government spending. At the same time, trust in government is on the decline," said Jeffrey Zients, Obama's chief performance officer, noting that only 22 percent of Americans trust the government -- a half-century low. "To make sure every tax dollar is spent wisely, we have to get the right people."
In addition to throwing out the knowledge essays, Berry said the changes will:
Controversy Dogs Efforts to Regulate Derivatives
This article was originally published by the Fiscal Times on Wednesday, May 5, 2010.
Efforts to regulate financial derivatives trigger memories of a failed effort during the Clinton administration to impose regulations.
By Katherine Reynolds Lewis
As the Senate negotiates sweeping changes to financial regulations, some policy experts are flashing back to the late 1990s, when a Clinton administration appointee named Brooksley Born explored oversight of complex financial contracts known as over-the-counter derivatives.
Born, an attorney, chaired the Commodity Futures Trading Commission. Her efforts to shed light on and regulate the opaque world of derivatives quickly died in the face of vehement opposition from then-Federal Reserve Board chairman Alan Greenspan, Treasury secretary Robert Rubin, powerful members of Congress, and Wall Street executives who opposed increased market regulation.
Now that credit default swaps and mortgage-based derivatives have been implicated in the near collapse of the international financial markets, it's only natural to wonder what the world would have looked like if Born and the CFTC had succeeded in bringing transparency to the $600 trillion derivatives market — or even imposing capital and margin requirements.
"It would've prevented the meltdown because there would've been too much information that would have countered the theory that housing prices would always go up," said Michael Greenberger, who was director of the division of trading and markets at Born's CFTC. "If regulators had seen the gambling, they would've seen that the risk was being repeated by multiple institutions."
