Washington - President Barack Obama proposed massive changes Wednesday to how the United States regulates its financial industry, hoping to win new government powers that his administration believes could prevent another financial crisis from ever taking place. Promising "a transformation on a scale not seen since the reforms that followed the Great Depression" of the 1930s, Obama would vastly expand the authority of the Federal Reserve and create an "oversight council" of regulators to watch over the entire US financial sector.
Obama hopes to extend government regulation to virtually all corners of Wall Street, including hedge funds and complex financial products like mortgage-backed securities, which share blame for the current financial crisis but have faced little or no regulation.
Obama hailed the ideas, which were presented in an 89-page White Paper, as a way or breaking the regular cycle of "booms and busts" that have been a part of financial markets for decades.
But while Wall Street's practices may have been at the centre, Obama spread the blame across banks, the government and ordinary Americans for causing the worst financial crisis - and longest recession - in the United States in 70 years.
"A culture of irresponsibility took root from Wall Street to Washington to Main Street," Obama said in prepared remarks released by the White House, ahead of a planned speech Wednesday afternoon.
"And a regulatory regime basically crafted in the wake of a 20th century economic crisis - the Great Depression - was overwhelmed by the speed, scope and sophistication of a 21st century global economy," Obama said.
Obama's proposals would put the US central bank in charge of monitoring the country's biggest financial firms - those considered critical to the health of the system as a whole. Those companies will also face new, stiffer requirements on how much capital and liquidity they keep in reserve.
The Obama administration also wants unprecedented powers to step into financial institutions that are facing imminent collapse, in order to force an orderly bankruptcy that would protect the wider economy.
Beginning with former president George W Bush, the US government has been forced to plug nearly 600 billion dollars into banks that were on the brink of collapse last October, after investment banking giant Lehman Brothers declared bankruptcy.
"We should not be forced to choose between allowing a company to fall into rapid and chaotic dissolution or to support the company with taxpayer money," Obama said.
The plan will now move to Congress, which
