Treasury Secretary Timothy Geithner told a Senate panel today that the Obama administration's plan to overhaul financial regulation was needed to avoid another financial meltdown but some Republicans complained that the plan was too far reaching.
"Every financial crisis of the last generation has sparked some effort at reform. But past efforts have begun too late, after the will to act has subsided. We cannot let that happen this time. We may disagree about the details, and we will have to work through those issues. But ordinary Americans have suffered too much; trust in our financial system has been too shaken; our economy has been brought too close to the brink for us to let this moment pass," he said in testimony prepared for his appearance before the Senate Banking Committee.
Sen. Richard Shelby (R-Ala.) said the proposal, which President Obama unveiled yesterday, gives the Federal Reserve Board too much additional power to regulate systemic risk.
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"I personally believe this represents a grossly inflated view of the Fed's expertise," said Shelby, the panel's senior Republican,
Sen. David Vitter (R-La.) said under the plan the Fed would be "more like a department of the government, rather than an independent bank."
Geithner defended the proposal to create a new agency to regulate financial products, saying it would "be able to write rules that promote transparency, simplicity and fairness, including defining standards for 'plain vanilla' products that have straightforward pricing."
The plan, which must be approved by Congress, keeps the NCUA as an independent agency.
Geithner was scheduled to testify on the Obama plan before the House Financial Services Committee, but the session was postponed because of floor votes.
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