US President Barack Obama has proposed what he called the biggest overhaul of the financial regulatory system since the 1930s. The changes will inject the government further into the financial markets and banking and investment systems.
AFP - US President Barack Obama Wednesday proposed what he said was the most sweeping overhaul of the financial regulatory system since reforms implemented after the 1930s Great Depression.
The reforms will inject the government much further into the financial markets and banking and investment system -- even as some critics of the president say he did not go far enough.
"We did not choose how this crisis began. But we do have a choice in the legacy this crisis leaves behind," Obama said in remarks released by 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."
Obama was to formally lay out the proposed reforms in an event in the White House later on Wednesday.
The proposals, which must be approved by Congress, 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.
The White House said the reforms would also 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.
As previously announced, the reforms will include the creation of a Consumer Financial Protection Agency to shield Americans from the extremes of credit, savings and mortgage markets.
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," Obama said.
"Instead of reducing risk, the markets actually magnified risks 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."
Date created : 2009-06-17