Obama Reveals Bank Regulation Plan

President Announces Plan To Give Federal Reserve More Powers And Create Consumer Protection Agency

(CBS/AP)  Updated 2:55 p.m. ET

President Barack Obama proposed a major overhaul of the U.S. financial system Wednesday, unveiling measures he hopes would restore confidence and prevent a repeat of the worst crisis to hit Wall Street in seven decades.

The Obama plan would give new powers to the Federal Reserve - the U.S. central bank - to oversee the entire financial system and create a new consumer protection agency to guard against the types of abuses that played a big role in the current crisis. (Click here for Guy Campanile's analysis of the new regulations: What Obama's Plan Can And Cannot Do)

The plan the president is proposing, if enacted, would be the biggest changes since the 1930s - changes the president says might have prevented the current financial crisis, reports CBS News senior White House correspondent Bill Plante. Mr. Obama says he knows passing this will be - as he put it - "a heavy lift."

The president said his plan was "a sweeping overhaul of the financial regulatory system, a transformation on a scale not seen since the reforms that followed the Great Depression." (Click here for text of Mr. Obama full remarks.)

Mr. Obama attributed much of the country's current problem to "a cascade of mistakes and missed opportunities" which happened over several decades.

He again blamed that "a culture of irresponsibility took root from Wall Street to Washington to Main Street."

The 88-page white paper put forward by the administration will spark intense debate in Congress, with opponents already charging that it imposes too many restrictions that will harm the ability of U.S. financial companies to compete in the global economy.

The administration's plan details an effort to change a regulatory regime that Mr. Obama's economic team says was unable to cope with burgeoning new credit products and the increasing complexities of the marketplace.

Mr. Obama wants Congress to make the plan law by the end of the year, an ambitious goal given that he also is pushing lawmakers to overhaul the nation's health care system by October.

Both measures face a blizzard of opposition from special interest groups, who fear the changes envisioned will cut into profits or impose undue complexities on their industries.

In a Tuesday television interview, Mr. Obama said the plan was "a very strong set of regulatory measures that we think can prevent this kind of crisis from happening again."

"We are not bulldozing the whole system. We're very much starting with the regulatory structure we have and improving it," Christine Romer, the chair of the White House Counsel of Economic Advisers, said on CBS' The Early Show.

Rep. John Boehner, the Republican leader in the House of Representatives, countered by predicting "we'll have the federal government deciding what interest ought to be charged on credit cards, having the government decide what kind of financial products are available."

The financial sector and lawmakers from both parties agree that significant changes are need in rules that govern the intricate and interconnected world of banking and investment. But the details of Mr. Obama's proposal already are facing resistance.

Under Mr. Obama's plan, the Federal Reserve would gain power to supervise holding companies and large financial institutions considered so big that their failure could undermine the nation's financial system. But even as it gains new powers, the central bank would cede some banking authority to a new Consumer Financial Protection Agency.

Mr. Obama's proposal would require the Federal Reserve, which now can independently use emergency powers to bail out failing banks, to first obtain Treasury Department approval.

The expanded role of the central bank and the new consumer regulator were likely to be the two main areas of the political fight in Congress. Many bankers oppose a new consumer protection regulator and many lawmakers worry the Federal Reserve could become too powerful.

Working along side the Federal Reserve, but without power to overrule the central bank, would be a new council of regulators that would monitor the overall financial system with an eye to preventing the unexpected collapse of huge institutions as happened last fall with AIG, the insurance company, and the Lehman Brothers brokerage.

Mr. Obama's plan does not attempt major consolidation of regulatory agencies and does not inject itself into an ongoing debate over whether to bring some insurance companies under federal oversight.

"We don't want to tilt at windmills," Mr. Obama said on CNBC.

Mr. Obama's decision to create a consumer agency is in response to criticism that mortgage lenders and credit card companies have taken advantage of unsuspecting customers and saddled them with too much debt.

The new regulator would have the power to demand that customers have the option of simple financial products, to impose fines and to allow states to pass laws that are stricter than the federal standards.

Consumer protections are now spread among various state and federal authorities, including the Federal Reserve, the Securities and Exchange Commission, the Federal Trade Commission and a variety of banking regulators.

[hungry1968-15]

This is one of the very few issues, where I disagree with Obama.

This isn't going anywhere near as far as it should, nor are the regulations strong enough.

All of these "financial products", (CDS's, CDO's, etc, etc), should be PERMANENTLY ELIMINATED. The ONLY "financial products" that should be available are stocks, bonds, and mutual funds - PERIOD.

[FleetGhost]

YA HOO!!!! YA HOOO! The president listens. The president is a very smart man. I hope what this means is the restoration of the safeguards of the Glass-Stegall Act of 1933 that was passed at the time of the Great Depression. Its regulation was gradually dismantled upon the ascension of Ronald Reagan to the presidency from 1980 on, and finally totally repealed with the Gramm-Leach-Bliley Act at the end of Bill Clinton's presidency in 1999 when he was involved in the Lewinsky scandal and impeachment hearings, in time for the ascension of George Bush to the presidency at which time a party was thrown attended by sponsoring congressmen and members of the Treasury Dept. toasting the inscription on a cake that read R.I.P. Glass-Stegall 50 years which enabled operation GROPE (the Greatest Robbery of the People Ever) commence from that time forward to the present.

[truthforhumanity]

We have reached DEFCON 1?alert?alert!

Analogy: How would you deal with a drunk driver?

A- Hand him a bottle of tequila and send him on his way down the road expecting his condition to improve?

B- Get him out from behind the wheel, off the road and lock him up?


If you chose option A, stop reading and go back to your sitcom/football game and bowl of popcorn.
If you chose option B, read on?

PROBLEM:
The Federal Reserve is above the law and Constitution, making it, no doubt, the most powerful ?corporation? in the world and dangerous to the future of the United States.
Take it from Allan Greenspan, the former Chairman of the Federal Reserve, who recently made an appearance on the PBS NewsHour with Jim Lehrer.
Lehrer asked Greenspan ?What should be the proper relationship between the Chairman of the Fed and a President of the United States??
Greenspan answered: ?Well, first of all, the Federal Reserve is an independent agency, and that means basically, that there is no other agency of the government which can overrule actions that we take. So long as that this is in place and there is no evidence that the administration or the congress or anybody else is requesting that we do things other than what we think is the appropriate thing, then what the relationships are don?t frankly matter.? Translation: The FED is above the law. It can?t be audited and conducts policy in secrecy.

The "Federal Reserve" is a PRIVATE corporation. It is no more "federal" than Federal Express. THE FED CANNOT BE AUDITED = NO OVERSIGHT.

SOLUTION:
The only hope at this point is the Federal Reserve Transparency Act, HR 1207, now up to 232 co-sponsors. It needs a two-thirds vote with 290 members on board. This bill would repeal special audit protections for the Federal Reserve (31 USC 714 ? Sec. 714) and calls for a full Government Accountability Office audit of the central bank to be completed before the end of 2010 and submitted to Congress for review. Contact your congressman/woman and tell them you support the bill. Do this in numbers as massive as possible. Join a group online to inform yourself.

Spend a few minutes online to check out if these statements are true or false. This is the first step to waking up.
Turn off FOX News and CNN?get your news from alternative news sites that base their information on facts that can be verified through documentation, not conjecture and manipulation.
Lastly, if you don?t take any initiative of your own to find out what?s going on, then regretfully, you get what you deserve-take another Prozac, wash it down with a glass of floridated water, and suck your thumb in the fetal position. Remember: Yes, we can!
By the way, Google this: ?protests low-level terrorism.? Soon you will not be allowed to voice your dissent publicly. Fact not fiction. Speak up and take action before it?s too late. Thank you for your attention.

[incog-nito]

Conservative arguments against Obama:

1) The bailouts prove he's in the pocket of big business.
2) He's going to turn America into a communist country.

1) All his talk of change is just hot air. Where's the change?
2) He's going to turn America into a communist country.

It would be nice if they can at least stay on a consistent line of reasoning.

[dedeshields]

A President killing a fly IS NOT news. It is stupid to use air time
when you could be asking intelligent questions. DeDe KC.MO

[ibsteve2u]

The final irony is that, if you subtract out voodoo economics and unbalanced, inequitable free trade with their resultant diversion or outright elimination of income from the middle class and working poor - the financial shenanigans the "deregulated = anything goes!" types in banking and on Wall Street would have worked!

lollll...the straw that broke the camel's (geographically punny, that) back was Bush's refusal to do anything about the hedge funds or speculation in oil futures.

The resultant surge in energy prices pushed too many mortgage holders off the edge and into the abyss of default.

Gad...greed kills brain cells.

[ibsteve2u]

It is laughable to read the right laying the blame for Fannie Mae's and Freddie Mac's faults at the feet of the Democrats.

If you are interested in THE TRUTH, go read Bush's speech at HUD on June 18, 2002 at http://www.hud.gov/news/speeches/presremarks.cfm.

Bush brags about having personally - as the President of the United States of America - laid the arm on Fannie Mae and Frddie Mac, with the result that Fannie Mae "created" $440 billion in capital for low-income types who didn't even have the means to provide a down payment.

Gad...how do you think that capital was "created"? With a stinkin' magic wand?

NO! It was "created" with those financial instruments that brought America to her knees - at the direction of the then-President of the United States of America - George W. Bush, proudly and obnoxiously Republican!!!

[ibsteve2u]

Although, come to think of it, for all practical purposes it WAS a stinkin' magic wand.

[ibsteve2u]

All of you people who are screaming that the fault lies at the feet of millions of American consumers should ask yourselves a simple question - to whit:

Which has a greater probability?

The existence of a conspiracy by millions of Americans who cooperated together to defraud America's economic system, each committed to ignore the unavoidably negative impact on the value of the homes they had purchased?

Or the existence of a conspiracy by a relative handful of people on Wall Street and in banking to get rich quick while Bush had regulation shut down?

Sheesh. And the right says that it is the moderates and the left who wear tin foil hats...

[NY-Joe-10]

by TheMasses0003 June 17, 2009 12:51 PM PDT
by specialty8 June 17, 2009 11:03 AM PDT

As soon as my water-logged east box wing dries out.
I think a few of my rats feel like they've been waterboarded too.
______________________________

You don't hear the rats screaming torture, do you Masses ? when will the rat memo be released ?

[TheMasses0003]

by specialty8 June 17, 2009 11:03 AM PDT
Masses,
I agree. There also should be a better regulation on boxes.They just can't take all this rain we are having.Write your congressman in support of 4 ply boxes.
-----------------------
Excellent idea speciality8.
I will do that asap.
As soon as my water-logged east box wing dries out.
I think a few of my rats feel like they've been waterboarded too.
Thanks!

[specialty8]

Masses,
I agree. There also should be a better regulation on boxes.They just can't take all this rain we are having.Write your congressman in support of 4 ply boxes.

[TheMasses0003]

There is a need for better oversight of the financial markets (ie: Madoff).

[jxknowles]

President Obama's plan is long overdue. While Republicans hand-cuffed the regulatory agencies and kept them underfunded and understaffed, the financial crooks ran wild. If you do research on the AIG crisis, you'll see why.

Too many whiners and crybabies running around like Chicken Little trying to scare everyone about big government. Don't be fooled. When there's no sheriff or serious enforcement in town, the goons come in like locusts and take over.

[mrs_trepidatious]

Oh what a terrible plan!

[jxknowles]

Did you actually read it?

[hclinton2012]

This LOSER of a President Barack Obama is trying to have the Government run everything, today the financial institutions, the car companies and Wall Street...tomorrow your individual life. I guess we are going toward an Iranian sytle government control of everything a person does? What a JOKE this LOSER of a President Obama has become?

[woeisme1]

I LOVE Obama! He's so smart that the average moron like some of you can't understand him. I know, you so used to that simpleton Bush. After all, he was leading us into two wars so nothing else mattered to you guys. You were happy then.

[credibility2]

Businesses and institutions need to be protected from predatory consumers. Why isn't Obama proposing anything to keep these abusive individuals in-check?

[All_pols_need_2_go]

Yeah turn over all regulation to the Federal Reserve what a great idea. You just have to be willing ot overlook the fact they are going all out to prevent having themselves audited. Ron Paul was pushing to get them audited but for some reason he isn't getting much support for do so. Could it be because if audited the same way EVERYONE ELSE IS AUDITED would show without any question that we have been and are being ripped off by our all knowing and bestowing government!

[skyk-2009]

You need to pick up some reading skills and then come back to comment. There is NO proposal to turn all the power over to the Fed... it says that NO WHERE in the SPEECH or in the ARTICLE. How can you properly discuss VERY needed Regulations if you can't understand the language?

[credibility2]

The president's speech, outlining the changes he wants in place for financial institutions is all well and good, but I'd like to know when he plans on putting into place regulations for individual consumers who scammed the system, living beyond their means, getting mortgages and credit cards they knew they couldn't afford and even hadn't any intention of paying back? Where are the regulations that forbid and prohibit these bottom-feeders from lying and being fraudulently abusive? It was laughable that one of the changes the president keeps pushing is to simplify verbiage of contracts. Yes, let's simplify because we have so many stupid people that they either can't read and comprehend for themselves, or they're too stupid and careless as to engage an attorney to help them decipher contract verbiage to protect the consumer's interest. These measures were always in place, but the president isn't one to expect personal responsibility and accountability. Instead what he wants to do is coddle the ignorant and careless consumer and tell them what is good for them and what isn't. Many of the changes he wants are unnecessary. We already have in place many regulations and agencies; some weren't strictly enforced. And agencies like the SEC, Fannie and Freddie, turned a blind eye. The Dem-controlled Congress also turned a blind eye when other entities, industry and political began raising concerns and urging investigations several years ago. Dodd, Frank, Waters, etc. were complicit in the crisis in the housing market with their pay to play cronyism for those at Fannie and Freddie. Let's stop fooling ourselves. Financial institutions share in the blame for the current economic crisis. But, so too does Congress and the bottom-feeder dolts on Main St.

[omega39-2009]

Perhaps the high priced CEOs running the lending institutions should have put their ivy league "edumacations" to use and actually scrutinized the million dollar, no document loans they were giving to the guy that ran the local leaf blower....

[ibsteve2u]

Of course, we wouldn't want to talk about the institutions that didn't care about the quality of the debt, because the numbers were what counted - the more mortgages you could bundle into an instrument, the higher you could leverage the resultant package because the economic viability of the individual consumers was simply not visible in the resultant instrument - now, would we?

[hclinton2012]

Billions for the wealthy "fat-cats" of Wall Street and the financial institutions that support this LOSER of a President Barack Obama, nothing for the average taxpayer who is losing their jobs and losing their homes to forecloser? What a JOKE this LOSER of a President Obama has become?

[skyk-2009]

BAAAAAAAAAAAAAHAHAHA Right! Time to change the foil!

[IThoughtItWasFunnyAgin]

Why would Obama give more powers to the Federal Reserve when they're the ones that pulled the economic HOAX for him in an election year?

So he can cover it up? And continue to cover it up?

Don't we already have legislative bodies that oversee banks? And why aren't we letting them do their job?

Why did the Federal Reserve keep the information from us for so many years? Because they wanted to pull it out in an election year?

[skyk-2009]

LOL Have you EVER posted anything on here that WASN'T a LIE? I mean do you honestly think people are so stupid they do not know that the melt down started BEFORE Obama came to office AND that the leader of the FED was appointed by Bush. You people are not only Irrelevant but are really embarrassing!