On Wednesday, President Obama proposed a set of new “rules of the road” to change the way the nation’s financial system is regulated. Obama’s proposal, which is outlined in an 88-page white paper, calls for fundamental shifts in financial oversight to help stabilize the economy and help prevent future crises from happening.
Specifically, the plan would make the Federal Reserve the regulator of some of the largest and most interconnected institutions in the financial world, an idea that has some institutions and lawmakers concerned. Among other initiatives, a separate council, chaired by U.S. Treasury Secretary Timothy Geithner, would watch over the financial system to flag new products or trends that may be risky. The plan would also create a new consumer protection agency that would take oversight of mortgages and require lenders to give borrowers loans with straightforward and affordable terms. For full details, please visit the Treasury’s Web site.
Yesterday, Secretary Geithner spoke before the Senate Committee on Banking, Housing and Urban Affairs about the Administration’s proposed overhaul of the supervision of financial markets. Defending the proposal, he said that the country “cannot afford inaction” in light of the current economic crisis. To hear Secretary Geithner’s testimony, please watch the video below.