Now that Barack Obama has won the White House, his campaign to overhaul a financial industry imperiled by its worst crisis in seven decades begins.
The president-elect has vowed a top-to-bottom examination, focusing on everything from the retail mortgage system to the capital requirements for the biggest lenders.
Obama wants a moratorium on home foreclosures and backs a congressional plan to encourage lenders to refinance troubled loans. He has proposed changing bankruptcy laws to allow judges to write down mortgage values, and to reduce the number of overlapping regulatory agencies. He would boost oversight of credit-rating companies and says he wants any company borrowing from the federal government to be subject to regulation.
“The last thing we can afford is four more years where no one in Washington is watching anyone on Wall Street because politicians and lobbyists killed common-sense regulations,” Obama, 47, said in a Nov. 3 speech. “It’s time for change.”
(Article continues below)
The most immediate issue facing Obama is how to handle the $700 billion bailout Congress passed last month. It gives Treasury Secretary Henry Paulson broad authority for “providing stability to and preventing disruption in the economy and financial system.”
- A d v e r t i s e m e n t
Obama’s economic team will cooperate rather than collaborate with Paulson’s staff in the transition before his Jan. 20 inauguration, and he will have leeway to shift the program in a direction more consistent with his own policies.
“The law is there, and it’s not only for Paulson,” said Peter Wallison, a former general counsel at the Treasury who is now a fellow at the American Enterprise Institute in Washington. “It was written to provide a tremendous amount of latitude depending on what the circumstances are.”