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![Obama said the reforms are on a scale not seen since the Great Depression in the 1930s [AFP]](http://mwcnews.net/images/stories/USA3/1/2/3/4/5/Obama-dealt.jpg "Obama said the reforms are on a scale not seen since the Great Depression in the 1930s [AFP]") | | Obama said the reforms are on a scale not seen since the Great Depression in the 1930s [AFP] |
Barack Obama, the US president, has revealed landmark new plans for wide-ranging financial regulation reforms including the creation of a national bank regulator and wider powers for the US Federal Reserve.
The plans, revealed at a news conference on Wednesday, aim to combat a US economic recession sparked by the nation's sub-prime mortage crisis and the collapse of several high profile US banks. "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 said. "We did not choose how this crisis began. But we do have a choice in the legacy this crisis leaves behind." Timothy Geithner, the US treasury secretary, members of congress, regulators and representatives from the financial industry and consumer groups also attended the event. Extending powers The plans propose a Financial Services Oversight Council, led by the treasury department, to oversee supervision of the financial system. Obama also called for the establishment of an independent consumer financial products watchdog agency, and for requiring financial firms to hold more capital so they can better survive tough times. US finance proposals - key points Strong oversight of financial firms, with more and better capital reserves – includes a new Financial Services Oversight Council Stronger regulation of core markets and market infrastructure, including regulation of credit agencies and credit default swaps Strengthened consumer protection - consumers to have greater transparency, simplicity, fairness, accountability, and access to fair lending law New government tools to aid financial crises Higher standards internationally The government would also be given the power to seize and dismantle large, troubled companies that are not banks, much as the US Federal Deposit Insurance Corporation does at present. The administration will also urge curbing markets for securitised debt and over-the-counter derivatives, as well as more regulation of money market mutual funds, credit rating agencies and hedge funds. There are also plans to urge changes in corporate governance that could give shareholders more power to restrain executive compensation. The US Office of Thrift Supervision - a federal bank regulator and superviser - will be abolished under the reform proposals, US officials also said. The agency was heavily criticised following the near collapse of insurance AIG, the US insurance giant, which was bailed out by the government for $180bn; the failure of Washington Mutual, the biggest bank to fail in US history; and the collapse of investment banking giant Lehman Brothers last September. 'Cleaning up' Following the announcement the proposals will be debated in US congress. Already committees of both the senate and the House of Representatives have scheduled more than a dozen hearings on regulatory reform between now and mid-July. Republicans in the House, meanwhile, have already offered their own rival plan. Obama earlier rejected criticism that the proposals meant excessive government interference in the business world, saying he would still see a "relatively light touch". "[It is] puzzling to hear the standard conservative critique of what we're doing, when essentially every step we're taking involves cleaning up the mess that we found when we arrived here at 1600 Pennsylvania Avenue [the White House]," he told the Wall Street Journal on Wednesday.
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Tags: Federal Reserve
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