Obama: We're Moving Toward Broader Regulation
In remarks underway now, President Obama said he is pushing toward new and broader regulation of the financial sector that he hopes will prevent the "bubble/bust mentality" and prevent larger systemic risk.
What the president is talking about is a version of macroprudential regulation -- something The Ticker has written about here and that gives government agencies broad powers to try to predict and then deflate bubbles before they burst.
Obama said non-banks, such as hedge funds, need to be subject to the same regulations that banks are under the FDIC.
The president said he has told Rep. Barney Frank (D-Mass.), chairman of the House Financial Services committee, to get to work on legislation creating the new regulation.
Addressing the AIG bonuses, and other corporate excess, Obama said: Just as outrageous is culture these bonuses are a symptom of. It existed for far too long -- excess greed, excess compensation, excess risk-taking have all made us vulnerable and left us holding the bank."
Obama may have actually said "bag," but he is speaking outdoors and it's hard to tell. Plus, it would be nice to think he was making a clever wordplay.
The president also took a whack at explaining the AIG mess. Here's the bulk of it, typed out as he spoke it, with a couple of words that we missed:
"AIG had insured a whole bunch of losses from a whole bunch of banks that had made bad bets on mortgages and losses. These were massive insurance policies. Unfortunately because of a lack of regulation, they were able to issue far more insurance policies than they could pay out on these various instruments...Had AIG been allowed to simply liquidate and go bankrupt, all those banks who were counterparties with AIG would have experienced such big losses that it would have threatened the entire financial system."
March 18, 2009; 12:38 PM ET
Categories: The Ticker | Tags: Obama, regulation
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