This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

The Deal: White House Defends Financial Crisis Response

"This was feared by many to be too weak, potentially not differentiate enough," he said. "What was very striking was that this idea, this signature proposal by President Obama and then Secretary Timothy Geithner to ensure that these large banks had enough capital to continue to do lending, even in a more adverse scenario, led to major banks raising $80 billion in capital without one penny of federal dollars going into the major banks."

Sperling, who is leaving the administration at the end of the year, also noted that banks are significantly better capitalized, as capital levels more than doubled over the past five years. He also supported a global agreement on bank capital known as Basel III that requires the largest U.S. and international banks to hold even more capital buffers as protection against a crisis.

Finally, he pointed to a recent leverage-limiting proposal introduced in July by the Federal Reserve and Federal Deposit Insurance Corp. that potentially could make U.S. banks cut back on their debt levels to an even greater extent than the amounts called for in the international agreement.

However, even though many critics of current bank capital levels support this proposal, including former FDIC chairman Sheila Bair, they also want it to restrict bank leverage even more. Also, concern has been expressed by fiscal policy makers about whether regulators will have the willpower to adopt it and if they do, will the final rule be one that keeps the banks from taking untoward risks.

The report also points to many other areas where the government stepped in to help stem panic and to limit future crises, including its effort to create a Consumer Financial Protection Bureau, which writes rules for mortgages and other credit products. It was created after big bank regulators mostly fell asleep at the switch when it came to mortgage origination restrictions; nonetheless, Capitol Hill Republicans fought against its establishment, as another example of big government, but also because it was to be run by one director, rather than a bipartisan panel.

Finally, the administration argued that key reforms have been implemented to "help ensure" that no financial institution is "too big to fail" and will be bailed out in another financial crisis. The report points out that big banks must write so-called "living wills" to ensure that in the event that they fail they can be dismantled in a way that does not cause damage to the global markets.

2 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
AAPL $124.43 -1.54%
FB $82.22 -1.18%
GOOG $548.00 -0.73%
TSLA $188.77 -0.94%
YHOO $44.44 -1.15%

Markets

DOW 17,776.12 -200.19 -1.11%
S&P 500 2,067.89 -18.35 -0.88%
NASDAQ 4,900.8850 -46.5560 -0.94%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs