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Obama warns Wall Street not to block tighter regulations

(Agencies)
Updated: 2009-09-15 09:31

Anticipating such criticism, Obama shot back against those pushing for less regulation.

"Do you really believe that the absence of sound regulation one year ago was good for the financial system?" he said. "Do you believe the resulting decline in markets and wealth and unemployment, the wrenching hardship that families are going through all across the country, was somehow good for our economy?"

He also told Wall Street that it had no need to wait for new laws to begin helping consumers with straight talk in the meantime.

Much of Obama's speech amounted to a recap of his proposals, first outlined in June.

He has sought tougher capital requirements for banks, arguing that banks' buying of exotic financial products without keeping enough cash in reserve was a key cause of the crisis. He wants more openness for the markets in which banks trade the most complex products.

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Obama's plan also would give the Federal Reserve new oversight powers and impose conditions designed to discourage companies from getting too big. And he proposes a consumer protection agency to make rules for financial products, so people know what they're buying.

The House Financial Services Committee, led by Rep. Barney Frank, D-Mass., who supports much of Obama's plan, is expected in October to take up the first piece of the legislation, one that would establish an agency focused on consumer protections. The panel has already passed legislation intended to curb excessive compensation at financial institutions.

Obama's plan could face significant revisions in the Senate, where Democrats have joined Republicans in questioning whether more power should be given to the Federal Reserve.

Industry is working particularly hard to kill or at least weaken the consumer protection agency idea, which it says will lead to increased costs for consumers, and various corporate interests are fighting the new rules for complex financial transactions, arguing they could stifle legitimate commerce.

Meanwhile, Obama made sure to dole out credit Monday - to his own administration.

He introduced his economic team and said its "outstanding leadership" of a financial stability plan helped the system emerge from crisis.

Obama warned against complacency but said: "We can be confident that the storms of the past two years are beginning to break."

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