Financial Reforms, Obama style.

This is the thirty sixth in a series of articles on the financial reforms sought to be initiated by the Obama Administration in U.S.A.

Internationally active financial firms: Some of the financial firms that fell in the recent crisis had a strong international presence, and consequently spread the contagion around, resulting in widespread panic and downslide in the markets.
This development has led to the thinking among the authorities that cross border firms needed to be properly supervized and regulated to prevent them from spreading panic and distress. Supervisory colleges have become active for the thirty most significant global financial institutions. More such colleges are in the offing.
Crisis prevention mechanism: One of the major reasons for the spread of the financial contagion throughout the western world was the interconnectedness of the financial markets through the medium of the big players. Consequently, when the big players went down, they took the market with them.
The United States and its international partners would work out a plan of action to spruce up the mechanism for cross-border resolution of financial firms by the following methods:
1) Resolution authorities would be empowered suitably with tools of intervention to prevent situations from going out of hand, and to initiate resolution procedures on an ongoing basis.
2) Information sharing mechanism between regulating authorities in different countries would be streamlined to facilitate joint and co-ordinated action whenever required.
3) Crisis management systems would be enhanced and finetuned to deal with failures of large cross-border firms.
4) To improve the effectiveness of the existing rules in respect of clearing and settlement of cross-border financial contracts and large value payments.
5) Cross-border crisis management is the latest mantra for containing the scourge of financial congation from spreading across borders and causing misery and distress all around.
To be concluded.