Financial Reforms, Obama style.

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

Introduction of better compensation packages: In general, compensation packages in the finance sector, especially the investment Banks, depended upon the profit pulled in by the whiz kids for their firm. This resulted in excessive risk taking. And when the risk materialized into reality, it led to the present crisis in the industry.
As such, compensation packages would henceforth be aligned to the long-term shareholder value and prudent risk-taking.
Money laundering, Terrorist financing etc: The United States is actively engaged in raising regulatory standards, within the U.S. as well as at the international level. The following areas would recieve special attention in the coming months and years- prudential supervision, tax information exchange, anti money-laundering, and terrorist financing.
Assessments and Peer reviews: The FSB has been engaged with international standard setters like the BCBS, International Association of Insurance Supervisors, the International Organization of Securities Commissions, and also the IMF to expand the use of assessments and peer reviews.
The existing level of compliance would be examined by building upon the existing applicable processes. The FSB is specially concerned with assessing compliance with international co-operation.
The International Co-operation Review Group of the FATF is charged with the responsibility of engaing with jurisdictions that don’t comply with the FATF guidelines, and to recommend counter measures in this regard.
Lack of international co-operation has been one of the major hurdles in implementing consistent laws to combat money laundering. Eventually, the U.S. and its international partners had to come up with tough measures and responses to bring the errant on board. Still a lot needs to be done.
To be concluded.