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US President Obama outlined the plans for a regulatory overhaul of the financial system. Changes include the establishment of an ‘oversight council’ to identify systemic risks, a ‘resolution authority’ to end the idea of too big to fail, a ‘consumer financial protection agency’, and stronger capital and liquidity requirements.
Calling for the most ambitious overhaul of the financial regulatory system since the Great Depression, President Obama also send a clear warning to Wall Street. “Instead of learning the lessons of Lehman and the crisis”, he said, some financial institutions are choosing to ignore them.
“We will not go back to the days of reckless behaviour and unchecked excess that was at the heart of this crisis, where too many were motivated only by the appetite for quick kills and bloated bonuses”, he warned. “Those on Wall Street cannot resume taking risks without regard for consequences, and expect that next time, American taxpayers will be there to break their fall.”
The President intends to create clear accountability and responsibility for regulating large financial firms that pose a systemic risk. “While holding the Federal Reserve fully accountable for regulation of the largest, most interconnected firms, we'll create an oversight council to bring together regulators from across markets to share
These financial firms will also be required to meet stronger capital and liquidity requirements and observe greater constraints on their risky behaviour, Obama outlined.
Furthermore, to make the failure of large and interconnected firms less likely that poses a threat to the stability of the financial system, the concept of a “resolution authority” was established “to put an end to the idea that some firms are "too big to fail.”
Full speech (written)
Full speech on Youtube: Part1, Part2, Part3