At 3:35 pm ET today in the Diplomatic Room, after meeting with Treasury Secretary Tim Geithner and the chairmen and ranking members of the Senate Banking and House Financial Services Committees, President Obama will discuss regulatory reform.
An administration official tells ABC News, "the president and Treasury secretary share the belief that we can’t truly fix this crisis and make sure it never happens again unless we embark on comprehensive regulatory reform. This afternoon, they will lay out their broad principles for regulatory reform legislation that they plan to work with Congress on in the coming weeks leading up to the G-20."
The president will say, according to excerpts:
"We now know from painful experience that we can no longer sustain 21st century markets with 20th century regulations. And that while free markets are the key to our progress, they do not give us free license to take whatever we can get, however we can get it.
"But let me be clear: the choice we face is not between an oppressive government-run economy and a chaotic and unforgiving capitalism. Rather, strong financial markets require clear rules of the road, not to hinder financial institutions, but to protect consumers and investors. Not to stifle, but to advance competition, growth and prosperity. And not just to manage crises – but to prevent crises in the first place by restoring accountability, transparency and trust in our financial markets. These must be the goals of the 21st century regulatory framework we seek to create.
"Our meeting today was a critical first step in developing that framework. I have asked my economic team to develop recommendations for regulatory reform, and to collaborate with members of Congress from both sides of the aisle so they can start crafting legislation in the coming weeks.
"We will not always see eye to eye in this work. We may disagree — and disagree strongly — about particular provisions. But there are certain core principles that must shape any proposal for reform — and these are the principles that will guide our work.
"First, financial institutions that pose serious risks to our markets should be subject to serious oversight by the government. When the Federal Reserve steps in as a lender of last resort, it is providing an insurance policy underwritten by the American taxpayer. Taxpayers should be assured that the Fed thoroughly understands the institutions it insures and actively monitors them to keep their risk-taking in check
"Second, our regulatory system — and each of our major markets — must be strong enough to withstand both system-wide stress and the failure of one or more large institutions. That means modernizing and streamlining our regulatory structure and monitoring both the scale and scope of risks institutions can take.
"Third, to rebuild trust in our markets, we must redouble our efforts to promote openness, transparency and plain language throughout our financial system.
"Fourth, we need strong and uniform supervision of financial products marketed to investors and consumers. And we should base this oversight not on abstract models created by the institutions themselves, but on actual data on how actual people make financial decisions.
"Fifth, we must demand strict accountability, starting from the top. Executives who violate the public trust must be held responsible.
"Sixth, we must make sure our system of regulations covers appropriate institutions and markets, is comprehensive and free of gaps, and prevents those being regulated from cherry-picking among competing regulators.
"Finally, we must recognize that the challenges we face are not just American challenges, they are global challenges. So as we work to set high regulatory standards here in the U.S., we must challenge the world to do the same. That is how we will stop financial crises from spilling across borders and prevent global crises of the kind we now face."