Archive for the ‘regulation’ Category

Government To Have Bigger Role in All American Lives; Obama Seeks to Increase Oversight of Executive Pay

March 21, 2009

The Obama administration will call for increased oversight of executive pay at all banks, Wall Street firms and possibly other companies as part of a sweeping plan to overhaul financial regulation, government officials said.

By STEPHEN LABATON
The New York Times
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The outlines of the plan are expected to be unveiled this week in preparation for President Obama’s first foreign summit meeting in early April.

Increasing oversight of executive pay has been under consideration for some time, but the decision was made in recent days as public fury over bonuses has spilled into the regulatory effort.

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The officials said that the administration was still debating the details of its plan, including how broadly it should be applied and how far it could range beyond simple reporting requirements. Depending on the outcome of the discussions, the administration could seek to put the changes into effect through regulations rather than through legislation.

One proposal could impose greater requirements on the boards of companies to tie executive compensation more closely to corporate performance and to take other steps to assure that outsize bonuses are not paid before meeting financial goals.

The new rules will cover all financial institutions, including those not now covered by any pay rules because they are not receiving federal bailout money. Officials say the rules could also be applied more broadly to publicly traded companies, which already report about some executive pay practices to the Securities and Exchange Commission. Last month, as part of the stimulus package, Congress barred top executives at large banks getting rescue money from receiving bonuses exceeding one-third of their annual pay.

Beyond the pay rules, officials said the regulatory plan is expected to call for a broad new role for the Federal Reserve to oversee large companies, including major hedge funds, whose problems could pose risks to the entire financial system.

It will propose that many kinds of derivatives and other exotic financial instruments that contributed to the crisis be traded on exchanges or through clearinghouses so they are more transparent and can be more tightly regulated. And to protect consumers, it will call for federal standards for mortgage lenders beyond what the Federal Reserve adopted last year, as well as more aggressive enforcement of the mortgage rules.

The plan is being put together in advance of the meeting of the Group of 20 industrialized and developing nations in London, an annual event that is expected to be dominated by the global financial crisis and discussions about better oversight of large financial companies whose problems could threaten to undermine international markets.

An important part of the plan still under debate is how to regulate the shadow banking system that Wall Street firms use to package and trade mortgage-backed securities, the so-called toxic assets held by many banks and blamed for the credit crisis.

Officials said the plan would also call for increasing the levels of capital that financial institutions need to hold to absorb possible losses. But in a sign of the fragility of the economic system officials said the administration would emphasize that those heightened standards should not be imposed now because they could discourage more lending. Rather, they would be put in place after the economy began to rebound.

“The argument some are making is that they don’t want to be stepping on the gas pedal and the brake at the same time,” said Morris Goldstein, a senior fellow at the Peterson Institute for International Economics and a former top official at the International Monetary Fund.

Administration officials are also debating how tightly to supervise hedge funds. A broad consensus has emerged among regulators and administration officials that hedge funds must be registered and more closely monitored, probably by the Securities and Exchange Commission. But officials have not decided how much the funds will have to disclose about their investments and trading practices.

A central aspect of the plan, which has already been announced by the administration, would give the government greater authority to take over and resolve problems at large, troubled companies that are not now regulated by Washington, like insurance companies and hedge funds.

Read the rest:
http://www.nytimes.com/2009/0
3/22/us/politics/22regulate.htm
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NYT:
http://www.nytimes.com/

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Michelle Malkin:
http://michellemalkin.com/2009/0
3/21/liveblogging-the-lexington
-ky-tea-party/

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China: Poorly Made Products Invade Auto Parts

December 20, 2008

Child restraints that may come apart in an impact. Fuses that could catch fire when overloaded. Tires susceptible to tread separation.

Those are some of the dangers American consumers face as Chinese manufacturers increase the number of automotive parts they are sending to the United States, according to consumer and safety advocates. They parallel problems with some other products from China ranging from medicine to pet food to children’s toys.

The complexity of today’s cars creates many possibilities for problems with imported parts: tire valves that break and let air escape; replacement window glass that does not meet the standards for tempered glass; high-intensity discharge headlight conversions that don’t meet federal standards.

There are so many automotive products coming in from China that American safety officials can’t keep track of them, said Clarence Ditlow, executive director of the Center for Auto Safety.

By Christopher Jensen
Wheels
The New York Times

auto parts
Above: Flaws in auto parts produced in China are raising concerns among safety advocates. Above, a transmission parts producer in Nanchang. (Adrian Bradshaw/European Pressphoto Agency)

Mr. Ditlow has been researching recalls of Chinese auto parts in the National Highway Traffic Safety Administration’s records. Those recalls are now posted on the safety center’s Web site.

Mr. Ditlow said his review convinces him that too many Chinese companies are unfamiliar with — or don’t care about — safety standards in the United States and thus don’t meet them.

For consumers, that means automotive equipment made in China is less likely to comply with safety standards than the same product made in the United States, Mr. Ditlow said.

“The companies in North America know that process,” he said.

Sean Kane is the director of Safety Research & Strategies, a consulting firm. He worried that consumers think there is more government oversight of automotive equipment coming from China than actually exists.

Dan Smith, associate administrator for enforcement at the National Highway Traffic Safety Administration, says one factor causing these problems is the speed at which China has industrialized.

“It is kind of like their Industrial Revolution happened in a quarter of the time ours did,” he said. “Therefore I think quality control measures need to be emphasized to the extreme in their products.”

Read the rest:
http://wheels.blogs.nytimes.com/2008/12/19/rec
alls-of-chinese-auto-parts-are-a-mounting-concern/?hp