Obama delivers his plan to overhaul financial regulation
— -- President Obama on Wednesday proposed the most sweeping overhaul of financial market regulation since the 1930s in response to a Wall Street crisis that sent the economy into an epic tailspin.
His plan would give broad new powers to the Federal Reserve, abolish the Office of Thrift Supervision, establish a new watchdog agency to protect consumers, and more tightly regulate hedge funds and derivatives, according to a senior Treasury Department official. The official requested anonymity because Obama has not announced details of the overhaul.
Aggressive marketing of subprime mortgages and their packaging into securities helped undercut financial systems and trigger a deep recession.
Obama wants Congress to make the plan law by the end of the year, an ambitious goal given that he also is pushing lawmakers to overhaul the nation's health care system by October.
Both measures face a blizzard of opposition from special interest groups, who fear the changes envisioned will cut into profits or impose undue complexities on their industries.
In his remarks, the president offered his version of the source of the financial crisis, tracing the troubles to complex financial instruments such as asset-backed securities that ended up concentrating risk. "It was easy money," he said. "But these schemes were built on a pile of sand."
The regulatory system either had gaps or overlaps with little accountability, he said.
"Millions of Americans who have worked hard and behaved responsibly have seen their life dreams eroded by the irresponsibility of others and the failure of their government to provide adequate oversight," Obama said.
The 88-page white paper delivered Wednesday by the administration will spark intense debate in Congress with opponents already claiming that it imposes too many restrictions that will harm the ability of U.S. financial companies to compete in the global economy. The proposals are designed to:
•Strengthen oversight of the financial system. A "financial services oversight council" headed by Treasury would make the Fed supervisor of all big financial holding companies.
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