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Fears over ambitious regulatory revision
By Anne Flaherty |
June 19, 2009, Friday
|
Print Edition
Print Edition
DEMOCRATIC leaders have committed to enacting by the end of this year the biggest regulatory revision to the United States financial system since the 1930s - an undertaking so ambitious it has some lawmakers worried about missteps.
"We have to evaluate it, weigh it, slow it down and make sure we do it right," said Senator Richard Shelby, the top Republican on the Senate Banking Committee. "Because if we don't, we will pay dearly."
Treasury Secretary Timothy Geithner outlined the administration's plan yesterday before the Senate panel and the House Financial Services Committee.
The proposal is aimed at filling in regulatory gaps and increasing oversight of the financial markets to prevent another economic calamity.
"We don't want to stifle innovation," said President Barack Obama in a speech on Wednesday.
"But I'm convinced that by setting out clear rules of the road and ensuring transparency and fair dealings, we will actually promote a more vibrant market," he added.
Obama wants to empower the Federal Reserve to oversee the largest and most influential financial firms. He also wants to create a council of federal regulators, chaired by the treasury secretary, to monitor risk across the broader market.
A new consumer protection agency would be created to prevent deceptive practices by such companies as credit card lenders and mortgage brokers.
In an interview on Wednesday with ABC News, Geithner outlined the three core elements of the package: consumer protection, safeguards against risk-taking by financial institutions, and new federal authority "to better manage ... the potential failure of large institutions."
The proposal was well-received among Democrats in Congress, who said it would prevent another round of bank bailouts and protect consumers from predatory lending practices.
"We regard this as very pro-market," said Representative Barney Frank, who chairs the House Financial Services Committee. "Unless you have investors that are well-protected, you don't have a market."
Senate Banking Committee Chairman Christopher Dodd said there would be "some debate," but "I think we're all seeking the same results."
"We have to evaluate it, weigh it, slow it down and make sure we do it right," said Senator Richard Shelby, the top Republican on the Senate Banking Committee. "Because if we don't, we will pay dearly."
Treasury Secretary Timothy Geithner outlined the administration's plan yesterday before the Senate panel and the House Financial Services Committee.
The proposal is aimed at filling in regulatory gaps and increasing oversight of the financial markets to prevent another economic calamity.
"We don't want to stifle innovation," said President Barack Obama in a speech on Wednesday.
"But I'm convinced that by setting out clear rules of the road and ensuring transparency and fair dealings, we will actually promote a more vibrant market," he added.
Obama wants to empower the Federal Reserve to oversee the largest and most influential financial firms. He also wants to create a council of federal regulators, chaired by the treasury secretary, to monitor risk across the broader market.
A new consumer protection agency would be created to prevent deceptive practices by such companies as credit card lenders and mortgage brokers.
In an interview on Wednesday with ABC News, Geithner outlined the three core elements of the package: consumer protection, safeguards against risk-taking by financial institutions, and new federal authority "to better manage ... the potential failure of large institutions."
The proposal was well-received among Democrats in Congress, who said it would prevent another round of bank bailouts and protect consumers from predatory lending practices.
"We regard this as very pro-market," said Representative Barney Frank, who chairs the House Financial Services Committee. "Unless you have investors that are well-protected, you don't have a market."
Senate Banking Committee Chairman Christopher Dodd said there would be "some debate," but "I think we're all seeking the same results."
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