Would the plan address the current problems in the housing and credit markets?
Nope. The plan was not intended to do so but rather to update the regulatory framework in the hopes of preventing future financial crises, says Dean Baker, codirector of the Center for Economic and Policy Research. Baker, however, is less than enthusiastic about the plan, arguing that it would not have prevented the current crisis even if it had been in place years ago. “It’s not clear that the regulators would have the authority to prevent investment banks from taking on the liabilities that not only jeopardized themselves—but in the view of [Fed Chairman Ben] Bernanke and just about everyone else—the whole financial system,” Baker says.
