President Obama aims to usher in a new era of consumer protections and banking restrictions Wednesday, checking off another legislative victory just before election-year politics overtakes the rest of his major agenda.
The president was set to sign a sweeping overhaul of financial regulations, a signature achievement that comes nearly two years after Wall Street's failures knocked the economy into the worst recession since the Great Depression.
The White House was planning a major signing ceremony featuring a long list of supporters of the legislation, including former Federal Reserve Chairman Paul Volcker and Robert Diamond, president of Barclay's PLC.
It's being hailed as the biggest shake-up in the financial industry since the reforms following the Great Depression, reports CBS News chief White House correspondent Chip Reid.
The law assembles a powerful council of regulators to be on the lookout for risks across the finance system and creates a new agency to guard consumers in their financial transactions. It places shadow financial markets that previously escaped the oversight of regulators under new scrutiny and gives the government new powers to break up companies that threaten the economy.
Large, failing financial institutions would be liquidated and the costs assessed on their surviving peers. Borrowers will be protected from hidden fees and abusive terms, but also will have to provide evidence that they can repay their loans. The Federal Reserve will get new powers while at the same time coming under expanded congressional oversight.
The new law is intended to prevent a meltdown like the one we saw in 2008, reports Reid, but while it does have teeth, critics charge the legislation doesn't have a big enough bite.
The bill fails to cover some key concerns, including clear plans to reform mortgage giants Freddie Mac and, and the creation of a fund to help shut down big banks when they do fail, says Reid.
Though Obama and his top officials urged Congress to pass the law while the memory of the 2008 financial meltdown was still fresh, many of the law's provisions won't take effect for at least a year as regulators scramble to write new rules and implement them.
"That will take some time, but it is worth it," Deputy Treasury Secretary Neal Wolin said Tuesday.
While the bill represents the end of a year's work by Congress and the administration, Obama has at least one contentious remnant from the bill to address. He must still nominate a director to the independent consumer protection bureau, an agency that became one of the bill's flashpoints and was attacked by Republicans as a broad expansion of government power over private business.
Among those expected at the signing ceremony is Elizabeth Warren, the Harvard law professor considered a leading candidate for the job. Warren is a consumer advocate who was among the first to propose the idea of a new agency for financial consumers. As head of the Congressional Oversight Panel for the government's $700 billion Troubled Asset Relief Program, the bank rescue fund known as TARP, she has periodically clashed with Treasury Secretary Timothy Geithner.
Liberals and unions have been aggressively pressing for her appointment. AFL-CIO President Richard Trumka was among the latest to weigh in on behalf of Warren Tuesday, saying she is the only candidate "uniquely qualified and equipped to head this new agency."
But opposition in the Senate could make her confirmation difficult, a point made by Senate Banking Committee Chairman Christopher Dodd in a radio interview on NPR Monday.
Also under serious consideration by the White House is assistant Treasury secretary Michael Barr, one of the architects of the financial regulation bill and a close ally of some White House officials. Deputy assistant attorney general Eugene Kimmelman is also in the running for the slot.