Look past election

Dear Scott: I read in the business pages the other day that the president wants to change the way the government oversees the financial system in our country. Can you explain what some of the changes are?

-- N.H., via the Internet

Dear N.H.: You can substitute the word "change" in your question to the word "overhaul."

If the Bush administration has its way, the overhaul would be the most dramatic change, since the Depression, in the way the government regulates banks, investment firms, insurance agents and mortgage brokers.

The most significant change contained in the 218-page proposal would be the creation of one super-duper agency in charge of protecting the consumer. This unnamed agency would perform many of the functions now performed by the Securities and Exchange Commission.

The plan would also enhance the powers of Ben Bernanke and the boys and girls at the Federal Reserve, giving them far-reaching power to protect the nation's financial system and merge day-to-day bank supervision into one agency, down from five currently.

President Bush's proposal would eliminate the Commodity Futures Trading Commission and the Office of Thrift Supervision (I've never been real clear on what either of these two agencies do) and dole out their responsibilities to existing agencies. New agencies would tighten up minimum licensing standards for mortgage brokers, who aren't regulated now, and create federal regulating standards for the insurance industry.

The proposal comes at a time when it is sorely needed. The nation's financial system is facing its most severe credit crisis in 20 years and has resulted in billions of dollars in losses for the country's mega banks. The nation's fifth-largest investment bank, Bear Stearns, nearly went into bankruptcy, and millions of Americans are turning to their credit cards because traditional sources for obtaining credit are turning them away.

But don't turn blue in the face holding your breath. As with all things political, there will be a lot of huffing and puffing in the hallways of Congress before anything gets done. And let's not forget the lobbying groups for the nation's banking and insurance industries. They, too, will lob a grenade into the debate as, by and large, they oppose the proposals.

So if I were to crystal-ball the future of this plan I would say you're looking at the footprint of either (in alphabetical order as to not to show favorites) Barack, Hillary or John on this one.

U. Scott Smith is with Wealth Management Services at Waukegan Savings Bank. Write him at 1324 Golf Road, Waukegan, IL 60087