Obama to axe bank agency in US financial overhaul

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(Agencies)
Updated: 2009-06-17 10:11

WASHINGTON - The Obama administration plans to streamline US bank oversight and put the Federal Reserve in charge of monitoring big-picture economic risks in a sweeping regulatory overhaul to be formally unveiled on Wednesday, a senior administration official said.

The Office of Thrift Supervision, a Treasury Department unit, would be closed and the federal charter under which savings and loans operate eliminated under the plan, the official told reporters on a conference call on Tuesday.

Obama to axe bank agency in US financial overhaul
US President Barack Obama delivers remarks on the health care system at the annual meeting of the American Medical Association in Chicago, Illinois, June 15, 2009. The administration is expected to unveil a sweeping financial regulatory overhaul on Wednesday. [Agencies]

The Fed would work in conjunction with a council of other regulators, to be chaired by Treasury, on monitoring "systemic risk" under the plan.

The aim is to avert future problems like the severe banking and capital markets crisis that has hammered economies worldwide since early 2008, without shackling firms so tightly that they cannot drive economic growth.

"There is going to be streamlining, consolidation ... so that you don't find people falling through the gaps," President Barack Obama told reporters earlier on Tuesday.

"Whether it's on the consumer protection side, the investor protection side, the systemic risks ... It's going to be a much more effectively integrated system than previously," he said.

The administration has been discussing for six months how best to tighten bank and market regulation in response to the crisis, with the European Union moving on a similar track, more quickly in some areas than the United States.

Months of debate lie ahead in the US Congress, with many of the proposed changes requiring legislation. Senate and House of Representatives committees have scheduled more than a dozen hearings between now and mid-July.

Obama on Wednesday will also call for establishment of an independent consumer financial products watchdog agency to write and enforce rules on fair lending and other matters.

Other administration goals include forcing financial groups to hold more capital so they can better survive tough times, and bringing more transparency and accountability to exotic financial markets that in recent years expanded far beyond the government's ability to keep track of them.

Obama Sees 'Heavy Lift' on Reform Plan

The president pledged to pursue major changes, but warned it will be a "heavy lift" politically with special interests already offering opposition. Earlier on Tuesday, the US Chamber of Commerce, the nation's largest business lobbying group, said it opposes key parts of the plan.

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