A goal of reform is to create a systemic risk regulator responsible for monitoring financial markets and institutions in order to head off the kind of high-stakes practices that contributed to current economic miseries.
White House spokesman Robert Gibbs said President Obama wants both regulation reform and a new "resolution authority" to deal with giants such as American International Group that get into complex financial trouble. He said the authority would be used "to break apart, unwind, and finally resolve the issues that we face with systemic risk."
Restructuring the regulatory system, testified Steve Bartlett, chief executive of the Financial Services Roundtable, "should be Congress's primary mission moving forward to resolve the crisis and prevent another crisis."
Tim Ryan, head of the Securities Industry and Financial Markets Association, said regulation should include all important financial institutions not already subject to it, such as insurance companies and hedge funds.
The Fed is frequently mentioned as best able to handle that general oversight role, but lawmakers from both parties questioned whether the Fed, which controls monetary policy and can direct federal funds to distressed markets, should get a larger oversight role.
"This so-called systemic risk regulator should not have the power to commit or obligate billions or hundreds of billions of taxpayer dollars to bailing out the so-called too-big-to-fail institutions," said Representative Spencer Bachus of Alabama, top Republican on the committee.
