Administration Pushes New Wall Street Rules
RENEE MONTAGNE, host:
This is MORNING EDITION, from NPR News. I'm Renee Montagne.
MARY LOUISE KELLY, host:
And I'm Mary Louise Kelly.
With health care out of the way, the Obama administration is turning to a new top priority: financial regulation. The president wants to overhaul the way the government oversees banks and other financial institutions.
The centerpiece of the plan is a new agency dedicated to protecting consumers from risky financial products. The plan would also reduce the number of existing bank regulators. The administration is up against powerful opposition. Officials are out on the offensive, making the case for reform. Yesterday, we spoke to Deputy Treasury Secretary Neal Wolin.
Deputy Secretary NEAL WOLIN (Department of Treasury): The problem with the current arrangement is that you've got many, many different entities - seven of them, in fact - that have consumer protection as part of their responsibilities. But for none of them is consumer protection the priority. And so we've put forward a proposal that would collapse the seven pieces of different entities into one watchdog for consumer protection, one entity for whom consumer protection will be the priority. So you take that...
KELLY: So you're talking about pulling out the wings of each of all of these agencies that are out there that are currently dealing with consumer protection, consumer rights and consolidating them, making one watchdog.
Dept. Sec. WOLIN: Exactly. And we think that's not more government. We think that's, in fact, more efficient government and better government.
KELLY: One of the criticisms you hear a lot is that there is this whole alphabet soup of federal agencies out there regulating right now. And the banks think one regulator, maybe, is being too tough on them, they can turn - try to find another that may be more lenient. What exactly would the reforms the administration is pushing do about that in terms of trying to streamline some of this?
Dept. Sec. WOLIN: Well, our proposals would collapse some of these regulators into others, and there would be fewer in the end. But there would still be regulators out there that relate to the financial system. We have tried to streamline the number of entities involved. The bills coming out of the House and the Senate do that. And we think that's good, important progress.
KELLY: When you say some of these agencies are going to be streamlined, will some of them cease to exist at some point?
Dept. Sec. WOLIN: Yeah. So, for example, Mary Louise, right now there is one federal regulator for national banks and another for federally chartered thrifts. Those two entities would be collapsed.
KELLY: Now, there are obviously some powerful players who don't think your plan is the way to go, the U.S. Chamber of Commerce right at the top of the list. They have launched a big ad campaign opposing these reforms. You went over there last week - is that right - to give a speech to the U.S. Chamber of Commerce. What kind of reception did you get? Chilly?
Dept. Sec. WOLIN: I did. I would say I was met with a polite response. I said to the chamber that, obviously, everyone has a right to express their views, but that it was important, we thought, to make sure that we, as a country, have a strong framework that governs our financial system. It's in everyone's interest.
So I said to the chamber, let's be constructive. Let's move forward and put a system in place that will avoid the kinds of catastrophes we've all just been through, rather than just trying on the basis of special interests to try to leave the status quo in place and fight against any reform.
KELLY: Did any of the points that the Chamber of Commerce and banks more broadly are making, do any of those points resonate with you, though? I mean, there's real concern about overregulation. Do you see any room for middle ground with the progress you're making?
Dept. Sec. WOLIN: Mary Louise, we've been working with a whole range of market participants and others through this entire process. The reform proposals that the president laid out reflect an awful lot of input from the business community, from the financial services community, as well as consumer groups, to make sure that we get this balance right.
And we do think that it's important to have a strong system of rules in place. If we don't have that, we run the risk that we go through the kinds of experiences that we've just been through, which are not good for anyone, including business or the financial community.
KELLY: All right. Well, let me play devil's advocate for a minute here and ask are the reforms that you are pushing, do they go far enough? If you, you know, as you say, we've been through this terrible crisis over the last year and a half. Why not go farther? Why not break up the big banks, for example?
Dept. Sec. WOLIN: Well, we think we've put forward a set of proposals that are very strong, very tough, closing down loopholes, making sure that big banks aren't too big to fail. And the legislation that we proposed includes important measures that allow for regulators to break up banks if they think they're too risky, that make sure that banks don't engage in the kinds of activities that are the riskiest so that we make sure that our financial system as a whole is well protected from the kinds of trouble that we've all just been through.
KELLY: Realistically, when do you see this happening? What's your timeframe?
Dept. Sec. WOLIN: Well, I think Congress is likely to finish action on this legislation this year. We think it's very important that they do so two years into this crisis. The House has passed legislation.
Chairman Dodd of the Banking Committee expects to take this to the floor of the Senate in April, and we look forward to working with him and others in Congress to move this forward as quickly as possible.
KELLY: Neal Wolin, deputy secretary of the treasury. Thanks for coming in.
Dept. Sec. WOLIN: Thank you.