I saw a lot of hype on these before they were released but no real substance on what they contained. Here are the three orders. Technically two of them are presidential memoranda.
Tl;dr: Secretary of the Treasury shall bring me a plan to make taxes cheaper, to make filing taxes easier, and to point out any taxes that exceed the IRS's statutory authority.
Tl;dr: Secretary of the Treasury shall examine the Orderly Liquidation Authority and determine if it causes undue moral hazard, whether it's really necessary to prevent failing companies from failing in the first place, whether it causes financial burden to the taxpayer (whether the Orderly Liquidation Fund works as intended), and whether liquidation of failing companies instead could be handled by a new chapter of the bankruptcy code or by a modified chapter 11 of the bankruptcy code.
Background on the OLA: The OLA steps in to quickly and (hopefully) less painfully liquidate companies than would happen in normal bankruptcy proceedings. The costs of this are to be borne by the Orderly Liquidation Fund, which is supposed to be replenished by assessments on other financial companies. Basically instead of letting a dying elephant thrash around and cause panic, the government comes up and shoots it.
Basically the two sides to this executive order are: (a) if you're an elephant and you get sick, is the government gonna come shoot you cause they think you were gonna die anyways? And does this mean we don't need to worry about dying elephants around us? Plus who pays for the bullets and cleanup? (b) These panic caused by an elephant in its death throes may cause an injury-causing panic/stampede, even if no other animals are gored by the flailing tusks. More in-depth pro-OLA by Ben Bernanke himself, though for some reason he doesn't use elephant metaphors.
Tl;dr: Secretary of the Treasury shall examine the Financial Stability Oversight Council to determine its transparency, whether it uses due process, whether it gives implicit bailout guarantees, whether its methods of evaluation considers the likelihood of distress (rather than just potential magnitude), whether specific quantitative magnitudes of potential damage of failing institutions to the US economy are generated, whether the costs to the regulated entity are examined, whether entities have a fair chance to defend themselves, whether entities are told how they can reduce their risk below the threshold, and whether the FSOC is consistent with Trump's earlier executive order, titled "Core Principles for Regulating the United States Financial System."
Background on the FSOC: Some large institutions are not regulated by any bank regulators (OTS, OCC, Fed, FDIC, NCUA) and do not fall under the requirements of Basel III, yet act similarly to banks and have similar consequences of failure. For example: Fannie and Freddie, Countrywide's non-bank section, AIG FP, bank holding companies, money market funds, and other shadow banks. In an attempt to close this loophole, the FSOC was created and given the duty (among a few other duties) of identifying these companies or industries, and determining whether they are to be brought under the supervision of the Fed. This isn't just for regulatory purposes, but also allows the entities to use Fed's wire transfer system (fedwire), and allows the Fed to more easily pump liquidity into these entities through the use of the discount window, without having to (I believe) use Section 13(3) of the Federal Reserve Act.
Basically the two sides to this executive order are: (a) this is a way for the government to regulate anybody they want as a bank without the burden of proof, and (b) if you're gonna be too big to fail and may require a bailout, you need to be regulated as such.
Submitted April 22, 2017 at 03:52PM by ProGnuRights http://ift.tt/2pR1thi
