Obama reveals plans to overhaul financial regulation

President Barack Obama this afternoon officially unveiled his plan to remake the government agencies that oversee the financial industry, calling it a "sweeping overhaul" designed to remedy a series of "mistakes and missed opportunities" that have hobbled the U.S. economy.

The proposals would eliminate some regulators while empowering others. It would create a new agency charged with policing financial products, like mortgages and credit cards, that are marketed to consumers. And it would subject companies seen as "too big to fail" to closer supervision.

The reforms are necessary after a network of safeguards "crafted in the wake of a 20th century crisis, the Great Depression, was overwhelmed by the speed, scope and sophistication of a 21st century global economy," Obama said.

The Federal Reserve appears to be one of the biggest winners under Obama's proposal. It will gain authority over all financial companies that could pose a risk to the entire financial system if they failed, even if they don't own banks. The Fed now regulates only bank holding companies.

The biggest loser seems likely to be the Office of Thrift Supervision, long seen as Washington's most lenient financial regulator. It will be merged into a new agency called the National Bank Supervisor along with the Office of the Comptroller of the Currency. The move is designed to keep companies from "shopping around" for a regulator willing to sign off on their activities.

Obama also proposed creating two new bodies: the Financial Services Oversight Council, a body comprising top regulators designed to offer a forum for tackling emerging financial threats; and the Consumer Financial Protection Agency, charged with shielding investors from fraudulent or deceptive practices.

"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.

Speaking after Obama, Senate Banking Committee Chris Dodd (D-Conn.) and House Financial Services Committee Chairman Barney Frank (D-Mass.), the lawmakers who will have to shepherd the plan through Congress, said they would move quickly on the proposals.

"We'll have it done this year," Dodd said, according to the Associated Press.
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