Obama: Financial Regs Need 'Substantial Overhaul'

In a preview of an interview with President-elect Obama scheduled to air tonight at 8 p.m. with CNBC's John Harwood, Obama said that government regulations overseeing U.S. financial institutions need a "substantial overhaul."

Obama said that the regulatory system "has not worked the it ought to have," pointing to complex financial instruments such as derivatives that flew under regulatory radar and wreaked havoc on the system.

"We've got to update the whole system to meet the needs of the 21st century," Obama said, echoing language used by Treasury Secretary Hank Paulson.

The push for new or even stronger regulations on financial markets -- including lightly regulated institutions, such as hedge funds -- likely will run into opposition from the few remaining free-market Republicans on Capitol Hill.

-- Frank Ahrens
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