AP: WASHINGTON President Barack Obama proposed new "rules of the road" for the nation's financial system Wednesday, casting the changes as an essential response to the economic crisis and the greatest regulatory transformation since the Great Depression.
Obama blamed the crisis on "a culture of irresponsibility" that he said had taken root from Wall Street to Washington to Main Street, and he said regulations crafted to deal with the depression of the 1930s were "overwhelmed by the speed, scope and sophistication of a 21st century global economy."
The Obama plan would give new powers to the Federal Reserve to oversee the entire financial system and would also create a new consumer protection agency to guard against credit and other abuses that played a big role in the current crisis.
In remarks prepared for delivery later in the day, Obama attributed much of the country's current problem to "a cascade of mistakes and missed opportunities" that happened over decades.
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The Fed's expanded authority and the rest of the new rules would reach into currently unregulated regions of the financial markets. An 88-page white paper released by the administration detailed an effort to change a regime that Obama's economic team maintained had become too porous for the innovations and intricacies of today's financial markets.
Obama said the plan was designed in consultation with lawmakers, regulators and the institutions it seeks to police.
"We seek a careful balance," Obama said.
The plan would do away with the Office of Thrift Supervision, replacing it with a system aimed at closing gaps in coverage and keeping institutions from shopping for the most lenient bank regulator. The consumer agency would place new restrictions on lenders and mortgage brokers, requiring them to offer simple loans to consumers.
"Mortgage brokers will be held to higher standards, exotic mortgages that hide exploding costs will no longer be the norm, home mortgage disclosures will be reasonable, clearly written, and concise," Obama said.