Treasury Secretary Timothy Geithner ran into immediate criticism on Capitol Hill over the specifics of tough new regulations of the nation's banks that most everyone agrees are needed.
Geithner today began the tough job of selling Congress on the Obama administration's new financial regulations, saying we must act while the economic collapse is fresh in our minds.
"Every financial crisis of the past generation has sparked some effort at reform," Geithner said. "But past efforts have begun too late, often after the will to act has subsided. We cannot let this happen this time.
Geithner said that gaps and weaknesses in the regulatory framework governing banks and other financial institutions "presented challenges" to the government's ability to monitor and address risky market bets.
One problem, he says, is that no single regulator saw its job as protecting the economy and financial system as a whole.
The administration's plan, which Geithner outlined Thursday before the Senate Banking Committee, would give broad new power to the Federal Reserve supported by a new council of regulators.
President 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.
(For analysis of the new regulations see What Obama's Plan Can And Cannot Do.)
The proposal was well-received among Democrats on Capitol Hill, 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 Rep. Barney Frank, D-Mass., 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."
In prepared testimony, Geithner said the Federal Reserve is best suited to become a super-regulator.
But CBS News Capitol Hill correspondent Bob Fuss reports that Senators are raising questions about giving broad new powers to the Federal Reserve, which one critic likens to giving a teenager a fast sports car right after he crashes the family station wagon.
Among those worried is Senator Richard Shelby.
"I personally believe this represents a grossly inflated view of the Fed's expertise," said Shelby, R-Ala.
Democrat Chuck Schumer of New York says too many different agencies would still regulate banks.
"A multiplicity of regulators tends to produce less oversight overall," he said.
But it was pressure from others in Congress, said Fuss, that kept the administration from proposing combining those regulatory agencies.
The administration also said a council of regulators wouldn't be an effective "first responder" in a financial emergency.
"You don't convene a committee to put out a fire," Geithner told lawmakers today.
Dodd said Thursday ahead of the meeting that protecting consumers should be a top priority when overhauling the regulatory framework that governs banks and other financial institutions.
Dodd said people were hurting and angry from the economic downturn and that "someone should have their backs."
The Connecticut Democrat also says that regulators must be empowered and that gaps in oversight should be eliminated.
Dodd has committed to trying to push through oversight reforms by the end of the year.