Boston, MA, December 8, 2008
– A new report from Aite Group, LLC explores possible regulatory and legislative responses to
the current financial crisis, with particular attention paid to three key topics: consumer lending, risk
management and deposit relationships. Looking at commentary from regulators, proposed and recently enacted
legislation, and the context of the current political season, Aite Group predicts likely responses in
these three areas.
Whereas just months ago concerns about economic conditions were theoretical and abstract,
they are now practical and concrete. Regulators on all levels are scrambling to identify problems, plug
any holes, and define their roles as defenders of the public good. There is little doubt that regulators
and lawmakers are poised to act.
Aite Group believes that three central themes will guide the regulatory and legislative
response over the coming years: First, regulators will clearly be stepping forward with stronger controls
designed to measure and manage the risks carried by institutions; second, there will likely be some
operational controls imposed on institutions; and third, institutions should expect regulators to shift
the balance back toward the consumer, with efforts focused on providing more and better consumer protections.
"Congress is sympathetic to consumer pain, and well aware of consumer anger against
the market participants and financial institutions that created these problems, and the regulators who
were supposed to be watching them," says
Eva Weber, analyst with Aite Group and author of this report. "As a result, changes that seemed impossible
six months ago are now fairly certain to occur in the next 12 to 24 months. For once, consumers, regulators and institutions
all seem to agree that there is shared blame for the current problems, and that it will be important to act with a
combination of speed and caution. The only real question is how far the pendulum will swing toward consumers,
but sweeping changes that favor consumers seem likely."
This 20-page Impact Note contains one figure and seven tables. Clients of Aite Group's
Retail Banking service can download the report by clicking on the icon to the
right. 
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