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From NPR News this is ALL THINGS CONSIDERED. I'm Michele Norris.
ROBERT SIEGEL, host:
And I'm Robert Siegel.
Today President Obama unveiled what he called the most sweeping overhaul of financial regulation since the Great Depression. It's designed to avoid a repeat of the financial meltdown. The plan would give new powers to the Federal Reserve and establish a new consumer protection agency.
NPR's Scott Horsley reports from the White House.
SCOTT HORSLEY: President Obama's proposal comes after months of consultation with financial executives, regulators, academics and consumer advocates. Many of them were present in the White House East Room for the unveiling this afternoon. Mr. Obama said the financial mess wasn't just a failure of individuals but a failure of the entire system.
President BARACK OBAMA: Millions of Americans who have worked and behaved responsibly have seen their life dreams eroded by the irresponsibility of others and by the failure of their government to provide adequate oversight.
HORSLEY: The administration's plan is not, as some had hoped, a completely new regulatory system built from the ground up. But rather an updating of the existing structure with a few additions and some extra support around the foundation. Mr. Obama ticked off a series of regulatory fixes designed to address specific problems that contributed to the financial meltdown.
Pres. OBAMA: We've crafted reforms to pinpoint the structural weaknesses that allowed for this crisis. And to make sure that these problems are dealt with, so that we're preventing crises in the future.
HORSLEY: Mr. Obama says one of those problems was a patchwork of financial regulators. Each kept an eye on part of the financial system, but left big blind spots unsupervised.
Pres. OBAMA: Regulators were charged with seeing the trees but not the forest. And even then some firms that posed a so-called systemic risk were not regulated as strongly as others.
HORSLEY: The president's plan would give the Federal Reserve new power to oversee those big financial firms whose failure could create big problems. And it would create a council of regulators led by the Treasury Department to help fill any gaps. Mr. Obama also wants to set up one new regulator, the Consumer Financial Protection Agency, just to deal with retail lending, such as credit cards, student loans and home mortgages - where some of the cracks in the financial system first surfaced.
The plan would also include new rules for things like credit default swaps, which crippled the insurance giant AIG, and for securitized debt, which allowed some mortgage brokers to pass the buck on risky home loans. Republicans and some business people criticized the president's plan saying it would give the federal government too much power to micromanage the economy. Mr. Obama acknowledged some critics will say his proposal goes too far, while others will argue it doesn't go far enough.
Pres. OBAMA: There's always been a tension between those who place their faith in the invisible hand of the marketplace and those who place more trust in the guiding hand of the government. And that tension isn't a bad thing. It gives rise to healthy debates and creates a dynamism that makes it possible for us to adapt and grow.
HORSLEY: There's likely to be plenty of debate once the president's plan reaches Capitol Hill. Mr. Obama's proposal is just that - a proposal. And lawmakers will have a lot to say about ideas, like giving new powers to the Federal Reserve. Connecticut Democrat Chris Dodd heads the powerful Senate Banking Committee.
Senator CHRIS DODD (Democrat, Connecticut): There's not a lot of confidence in the fed at this point - and I'm stating the obvious - over what's happened over the last number of years. So I hear that expressed by my members of my committee, both Democrats and Republicans who are looking for an alternative, but I would tell you at this juncture, there's been no decision.
HORSLEY: Despite the critics and the complexity, Mr. Obama hopes to have the new regulations signed into law this year.
Scott Horsley, NPR News, the White House. Transcript provided by NPR, Copyright NPR.
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