Obama Initiative Seeks Financial Overhaul

Jim Kuhnhenn

WASHINGTON -- A new consumer protection agency highlights a financial system overhaul President Barack Obama plans to unveil Wednesday in an effort to avert future economic crises like the one still reaping havoc at home and around the globe.

Obama's sweeping change of business regulation also embraces new powers for the Federal Reserve and new rules that would reach into currently unregulated regions of the financial markets. An 85-page draft details an effort to change a regime that Obama's economic team maintained had become too porous for the innovations and intricacies of today's financial markets.

With Congress already embroiled in health-care legislation, Obama has set an ambitious schedule, pushing lawmakers to adopt a new regulatory regime by year's end. Obama said Tuesday he will put forward "a very strong set of regulatory measures that we think can prevent this kind of crisis from happening again."

Christina Romer, who heads the Council of Economic Advisers, called it an "appropriate balance" and said the administration was "not bulldozing the whole system." But House Republican Leader John Boehner said that it would have "the federal government deciding what interest ought to be charged on credit cards" and what financial products are available.

"I think it's just going to be too big of a foot on an industry that already is having financial problems," Boehner said in an appearance on ABC's "Good Morning America" Wednesday.

The financial sector and lawmakers from both parties concede the need for significant changes in the rules that govern the intricate and interconnected world of banking and investment. But the details of Obama's proposal already are facing resistance, signaling a tough sell for a president who is spending major political capital on his health-care overhaul.