The plan -- which recommends limiting the size of banks, setting guidelines for executive pay and regulating hedge funds -- offers the first hint of the kind of changes to the financial system President-elect Barack Obama might push for in the coming weeks and months. Mr. Obama has pledged to present a comprehensive series of changes to prevent a repeat of the current financial crisis before world leaders gather in London for a major economic summit in April.
The report was issued by the Group of 30, an organization of international economists and policy makers. But the recommendations were immediately seen by observers as a building block to an Obama plan because the lead author is Paul Volcker, Federal Reserve chairman during the Carter and Reagan administrations, who will serve as a special Obama White House adviser.
Part of Mr. Volcker's role is to help mastermind what could ultimately be the biggest overhaul of the U.S. financial system in decades. He said he would press the new administration to consider the measures, "but it's up to the administration to decide what they want to do."
The proposal offers 18 major recommendations that would insert government regulators into the board rooms of financial institutions as never before. The plan recommends vastly increased oversight of major banks, going as far as to recommend the end of an era of mega-banks, whose size makes their failure potentially catastrophic to the global financial system. To limit their size and scope, banks, the document states, should be prohibited from managing hedge funds or private equity funds.
If you want to know who is behind this program, take a look at the Group of 30.
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