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Obama Readies Plan to Tighten Financial Regulations


President Obama wants to wield more regulatory power over companies that have the potential to damage the entire financial system. Before he heads to the G20 conference, Obama plans to show his commitment to regulation (and not just government spending), so he can persuasively push European governments to do some spending of their own.

The New York Times reports that Obama's plan would require complex financial instruments, the kinds that contributed to the current mess, be traded through clearinghouses. In other words, this would make everything more transparent. Hedge funds would also become more closely monitored.

Another key component of the oversight rules would be limits on executive pay. To find out those details, read more.

The government might require that executive compensation be tied to corporate performance — that sounds pretty reasonable. But the rules could also apply to companies that aren't taking bailout money, raising concerns of undue intervention.

In addition, the government would have the power to cancel bonus contracts similar to those given to AIG execs. Right now the government can only take over the federally insured banking component of a company.

Do you think its necessary for the government to create tighter rules of regulation, instead of just trying to spend its way out of the crisis?

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