The Congressional Research Service recently issued a report on the global financial crisis entitled “The Global Financial Crisis: Analysis and Policy Implications”. The report is broken down into four main areas: (1) steps taken by the United States government to address the global financial crisis; (2) a description of the four phases of the global financial crisis; (3) a survey of the steps taken by the governments of several emerging market countries, as well as countries in Europe and Asia, to deal with the global financial crisis; and (4) an outline of the considerations that Congress should consider as it moves ahead with proposed legislative responses to the crisis.
The report describes the various actions taken by Congress, the Treasury, Federal Reserve, FDIC and other regulatory agencies in response to the crisis. The report notes that Congress is considering legislation proposed by the Obama Administration on a wide range of topics, including bills that would (i) create a systematic risk monitor; (ii) address concerns over the perceived failures of credit rating agencies in rating derivatives and other complex financial products; (ii) establish special committees to study the causes of the financial crisis and (iv) create a new Consumer Financial Protection Agency tasked with promoting access and protecting customers from predatory practices throughout the financial industry.
In its efforts to effect sound policy changes for dealing with both the current global financial crisis and any others that may arise in the future, the report notes that Congress must consider the following issues:
- whether any long-term policies should be designed to restore confidence and induce return to the normal functioning of a self-correcting system or whether the policies should be directed at changing a system that may have become inherently unstable;
- at what level any new regulatory authority should be created; and
- how U.S. regulations can be changed and how closely any changes should be harmonized with international standards.