© 2024 91.9 KVCR

KVCR is a service of the San Bernardino Community College District.

San Bernardino Community College District does not discriminate on the basis of age, color, creed, religion, disability, marital status, veteran status, national origin, race, sex, sexual orientation, gender identity or gender expression.

701 S Mt Vernon Avenue, San Bernardino CA 92410
Where you learn something new every day.
Play Live Radio
Next Up:
0:00 0:00
Available On Air Stations

Obama Introduces Sweeping Financial Overhaul


It's MORNING EDITION from NPR News. Renee is away, I'm Steve Inskeep. Good Morning.

Treasury Secretary Tim Geithner spends part of this day trying to sell something that is hard to oppose - in principle. He wants to change regulation of financial firms. Because of the credit crisis, that is hard to oppose in principle, but for the lawmakers Geithner will meet and the businesses who lobby them, the real battle is not in the principle, it's all on the details.

We will look at some of the details this morning, starting with NPR's John Ydstie.

JOHN YDSTIE: The president unveiled his 88-page guide to regulatory reform yesterday before a White House audience that included key lawmakers. He blamed the current crisis on a culture of irresponsibility that he said had taken root from Wall Street to Washington to Main Street. But he also blamed a failure of regulation.

President BARACK OBAMA: Millions of Americans who've worked hard and behave responsibly have seen their life dreams eroded by the irresponsibility of others and by the failure of their government to provide adequate oversight. Our entire economy has been undermined by that failure.

YDSTIE: To avoid future meltdowns, the president offered what he called new rules of the road for the financial system. They include requirements that banks and other financial firms hold adequate capital as reserves against losses. The president also called for regulation of hedge funds. And he wants oversight of exotic securities like credit default swaps that help fuel the financial crisis. Most should be traded on public exchanges instead of privately between individual firms, according to his plan. Scott Talbot is with the Financial Services Roundtable, which represents nearly 100 of the largest financial firms in the country. He says his group thinks the president has made a good first step.

Mr. SCOTT TALBOT (Financial Services Roundtable): We support a number of provisions in here. There's some we oppose, so let's start with the ones we support. We support creating a systemic risk regulator that will have the ability to look over all of the institutions and look for trends and practices that could threaten the stability of the system.

YDSTIE: Talbot is talking about the president's proposal to put the Federal Reserve in charge of large firms whose failure could undermine the broader economy. The Fed would be advised by a council of other regulators. The Roundtable also supports giving power to regulators to take over large non-bank financial firms that are failing, much as the FDIC takes over failing banks. But Talbot's group doesn't like the proposal President Obama made yesterday to create a new consumer financial protection agency. Mr. Obama said it would police financial products and oversee the relationship between consumers and financial firms.

Pres. OBAMA: This agency will have the power to set standards so that companies compete by offering innovative products that consumers actually want and actually understand.

Mr. TALBOT: It's a bad idea. We oppose the consumer financial protection agency.

YDSTIE: The reason, says Talbot, is there would be one regulator for the bank and another for the product.

Mr. TALBOT: You're separating out the regulation of the bank from the products it sells. And so each regulator in that scenario would only have half the picture. And we feel that weakens the overall system.

YDSTIE: Ellen Seidman doesn't think that's a serious problem. Seidman is the former top regulator at the Office of the Thrift Supervision and now a senior fellow at the New America Foundation, a Washington think-tank. She is a bit stunned and pleased at the president's consumer protection proposal.

Ms. ELLEN SEIDMAN (New America Foundation): It's really important to understand how revolutionary the fact that consumer protection is item number three in a five-item incredibly comprehensive proposal about financial services reform.

YDSTIE: Seidman also agrees with the administration's call to eliminate the Office of Thrift Supervision, which regulates savings and loans. That still leaves three federal bank regulators. Seidman says it would be better if there were just one. Then banks couldn't shop around for the most lenient regulator, as they do now. But, Seidman says, entrenched interests, including powerful lawmakers, the regulators themselves, and the banks, make getting down to one very difficult. Those kinds of political battles will make it a challenge to meet the president's deadline to pass a reform package by the end of the year.

John Ydstie, NPR News, Washington. Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

John Ydstie has covered the economy, Wall Street, and the Federal Reserve at NPR for nearly three decades. Over the years, NPR has also employed Ydstie's reporting skills to cover major stories like the aftermath of Sept. 11, Hurricane Katrina, the Jack Abramoff lobbying scandal, and the implementation of the Affordable Care Act. He was a lead reporter in NPR's coverage of the global financial crisis and the Great Recession, as well as the network's coverage of President Trump's economic policies. Ydstie has also been a guest host on the NPR news programs Morning Edition, All Things Considered, and Weekend Edition. Ydstie stepped back from full-time reporting in late 2018, but plans to continue to contribute to NPR through part-time assignments and work on special projects.