Obama Unveils Three-Pronged Economic Plan

Sen. Barack Obama (D., Ill.) offered an economic address Thursday morning in New York City where he suggested a greater role for the government in stimulating the economy:

"[Alexander] Hamilton had a strong belief in the power of the market. But he balanced that belief with the conviction that human enterprise 'may be beneficially stimulated by prudent aids and encouragements on the part of the government.' Government, he believed, had an important role to play in advancing our common prosperity."

Obama believes that America has lost the "sense of shared prosperity" and wants regulation to return markets to a "fair, and open, and honest" state. To that end, Obama put forward a three-point plan.

Obama Targets Wall Street's Piggy Bank

Obama's economic reform plan begins with the premise that financial regulation is out-dated and must be modernized to address 21st-century demands. He blames lobbyists for breaking down regulations causing our present crisis:

"A decade later, we have deregulated the financial services sector, and we face another crisis. A regulatory structure set up for banks in the 1930s needed to change because the nature of business has changed. But by the time the Glass-Steagall Act was repealed in 1999, the $300 million lobbying effort that drove deregulation was more about facilitating mergers than creating an efficient regulatory framework."

Obama hopes to realign the regulatory agencies. Many of the different agencies, including the Federal Reserve, Securities and Exchange Commission and Federal Deposit Insurance Corp., had varying duties before the repeal of the Glass-Steagall Act (which forbade commercial and investment banking at a single institution) and now overlap. Obama has particular concern over firms having access to the Fed lending window without sufficient oversight of their balance sheets and the possibility of the Fed playing favorites. Streamlining agencies has some merit; it may better allocate and coordinate government oversight. ...