We lack a bit of visibility on the definition of systemic risk

Beauvoir, a graduate of MIT and Professor of finance at the Stern School of Business at New York University, Thomas Philippon, thirty-four years, was awarded the prize of the best young Economist 2009 by circle of economists and "The world", may 25.

What this reform can help the authorities to further control the financial institutions and to better manage crises

The bulk of the device is intended to strengthen the powers of the Federal Reserve in terms of control of large firms with systemic risk, not only banks, but also the insurers or agencies such as Fannie Mae or Freddie Mac mortgage... Do not forget that, in the heart of the crisis, there was the insurer AIG, which is much more problematic than Citigroup in terms of public money invested by the taxpayer. There was also a consensus among economists to entrust the role of systemic regulator to the Fed. It is healthy that the lender of last resort, which creates the liquidity crisis, inherits of this mission.

That said, this strengthening of the powers of the Fed, even if it is balanced by the creation of a Board of supervisors attached to the Treasury, may encounter some resistance in the Congress. It is not won in advance.

The Fed sees no less certain of its reflowed powers, including loans for emergency or consumer protection.

It is the giving-giving to the Congress. The idea is to strengthen the powers of the Fed to regulate systemic risk before the crisis and limit its powers to grant loans in a discretionary manner during the crises. What Congress wants to avoid, it is that the Fed conducts industrial policy by promoting a company or one sector over another.

Why has the Obama administration waived the creation of a single, even if banking regulator fusion OTS - OCC gives rise to the National Bank Supervisor

Barack Obama chooses his battles. He knows that he cannot do everything and that he would have lost much time trying to impose a merger between the Securities and Exchange Commission and the Commodity Futures Trading Commission. However, the Office of Thrift Supervision has lost much of its interest and has not shone by its jurisdiction in the cases of AIG, IndyMac and Washington Mutual. Although it should ensure that financial institutions cannot arbitrate between supervisors, a certain degree of competition between regulators is not necessarily harmful.

Is the creation of an agency for the protection of consumers in the financial sector not contradict the objective of consolidation

Not necessarily, if its role is well defined. It is a good idea to control at the source the issuance of credits and put an end to certain abusive practices. There were many excesses and abuses that led to overindebtedness of American households.

What are the major shortcomings of the device in your eyes

Overall, the objectives are commendable, but Obama administration will have to negotiate with Congress on systemic risk, as his health reform. We lack a bit of visibility on the definition of systemic risk. It will have to set a threshold. However, is not necessarily a criterion of size, as seen with Lehman Brothers and Bear Stearns. In addition, Treasury will ask companies a systemic risk to strengthen their capital at December 31. But, again, there is a lack of details. Increase the level of capital to the banking crisis is certainly desirable, but is not necessarily a panacea. It should also curb the pro-cyclicality of the prudential rules. Finally, the problem of the bankruptcy of the financial giants is not really resolved, even if the FDIC is given a power of management of bankruptcy. The key issue is to limit the "moral hazard" and get rid of the concept of the "too big to fail".