US FINANCIAL REFORM: 'Sweeping' rules overhaul

June 18, 2009

US FINANCIAL REFORM

'Sweeping' rules overhaul

		President Barack Obama speaks at the White House in Washington on Wednesday. -- PHOTO: REUTERS

WASHINGTON - PRESIDENT Barack Obama on Wednesday proposed the most 'sweeping' regulatory overhaul since the 1930s, vowing to stop future meltdowns in a financial system humbled by lax oversight, greed and huge debts.

The reforms, which must be approved by Congress, will inject the government deeper into financial markets and industries in a bid to tame the recklessness which saw a mortgage meltdown tip the world into deep economic crisis.

VIDEO Obama unveils bank reform plans (2:19) Key proposals - A new Financial Services Oversight Council of regulators led by the Treasury to identify emerging 'systemic' risks and improve interagency cooperation. - New authority for the Federal Reserve to supervise all firms that could pose a threat to financial stability, even those that do not own banks. ... more Reforms face fight in Congress WASHINGTON - PRESIDENT Barack Obama's proposed financial regulatory overhaul could face big changes in Congress, where over the years members of both parties have permitted lax controls blamed for the US economic meltdown. Democratic and Republican lawmakers found fault with at least some of the ideas put forward in the president's proposal, which seeks to clamp down on the country's biggest financial firms in the hope of preventing another economic crisis. ... more

'We did not choose how this crisis began. But we do have a choice in the legacy this crisis leaves behind,' Mr Obama said, unveiling his reforms at the White House.

'So today, my administration is proposing a sweeping overhaul of the financial regulatory system, a transformation on a scale not seen since the reforms that followed the Great Depression.'

Mr Obama blamed a 'culture of irresponsibility' a Great Depression-era regulatory system, reckless executive compensation, excessive debt and markets awash in new and risky financial products for sparking the crisis.

'An absence of oversight engendered systematic, and systemic, abuse,' Mr Obama said.

'Instead of reducing risk, the markets actually magnified risks that were being taken by ordinary families and large firms alike.'

' There was far too much debt and not nearly enough capital in the system. And a growing economy bred complacency.'

The proposals would give the Federal Reserve new powers to clamp firm regulation on all finance firms or banks that pose a significant systemic risk to the wider financial infrastructure.

They would introduce new discipline and transparency into financial markets and would enable investors to better ride out the failure of one or more large financial institution. -- AFP

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