Here's a Really Swell Idea

LOOK! Up in the sky ... it's a new agency that will provide early warnings about the health of Wall Street firms by analyzing their balance sheets and other stuff that they provide to the SEC. BY the way, did these firms actually have all of the swaps and underlying on their books? I wonder if they will in the future? Golly, I really feel safe with the US Congress calling the shots.

What do you think?

Senators Endorse New Financial Analysis Agency

WASHINGTON — Senate Banking Committee members from both parties said Wednes- day they had agreed to include in their regulatory overhaul bill a new Office of Research and Analysis that would provide ear- ly warnings of possible systemic meltdowns.
The proposed agency, which has sometimes been referred to as the National Institute of Fi- nance, is intended to give regula- tors daily updates on the stability of individual firms as well as that of their trading partners, includ- ing hedge funds.
The agency would give regulators a broader view of the health of participants in the financial markets and the potential for problems to spread. The idea’s supporters say that kind of in- formation was lacking in recent years as the housing bubble burst and troubles spread from firm to firm.
The new agency would have no policy responsibilities but would instead collect and analyze data, building models to assess rela- tive risk levels and predict how one firm’s problems might affect others.
As proposed, the agency would be housed in the Treasury Depart- ment with a director, appointed by the president and confirmed by the Senate, who would be an ex-officio member of a systemic risk council that would be cre- ated by the bill. It would draw its budget from assessments on the largest financial firms, according
to people who are close to the ne- gotiations but who were not au- thorized to speak publicly.
The financial reform bill ap- proved last year by the House would create a systemic risk council that would collect simi- lar data without establishing an independent agency to do so, a difference that will have to be re- solved before a bill is sent to the president.
“One of the problems we ob- served in the recent crisis is that nobody knew who had what,” said Sen. Jack Reed, D-R.I., who last month introduced a separate bill to establish a National Insti- tute of Finance. “The result was a cascading effect of uncertainty and doubt.” NY Times

It begs the question, if a decent analyst can earn five times as much in the Street, why would she work for some agency that is only providing window dressing?