Transcripts

Treasury Secretary Timothy Geithner Wants A New Regulator

SUZANNE PRATT: Protecting Americans from another sub-prime mortgage mess or credit card abuses are major goals of the Obama administration's plans for financial regulatory reform. And the White House wants to give that job to a new agency, one with strong enforcement and rule making powers. Today, it sent Treasury Secretary Timothy Geithner to Capitol Hill to sell lawmakers on a new Agency. But Geithner ran into opposition from many of the people he works with every day. Darren Gersh explains.

DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: Today's hearing was as much about power politics as regulatory reform, a fact noted with some amusement by the man who called the hearing, House Financial Services Committee Chairman Barney Frank. Frank opened by marveling at the complaints he is hearing from the nation's assorted financial regulators.

REP. BARNEY FRANK, CHAIRMAN, HOUSE FINANCIAL SERVICES COMMITTEE: They can argue that taking the powers away from them may not make sense, because the powers that will be taken away from them are in very good shape because they have rarely been used.

GERSH: Which is why Barney Frank and the Obama administration want to put the power to protect consumers into a new regulator, the Consumer Financial Protection Agency. The goal is to make sure products like abusive sub-prime mortgages never again threaten the system or consumers with disaster. The Obama administration wants to go further, requiring financial institutions to offer simpler, so-called plain vanilla mortgages and other financial products as an option to consumers. That requirement has raised concern among many lawmakers, including Texas Republican Randy Neugebauer.

REP. RANDY NEUGEBAUER, (R) TEXAS: It begins (INAUDIBLE) government is trying to limit the choices of the American people, n other words, this is kind of the optimum credit card. This is the optimum mortgage. This is the optimum car loan and to me, I don't see that as the role of the Federal government.

GERSH: Neither does he, insisted Treasury Secretary Timothy Geithner.

GEITHNER: Innovation in products -- that's very important to us. This is one of the great strengths of our system. We just let it get a little too far away from any basic sense of gravity. We need to bring that balance back a little bit.

GERSH: But every regulator in town is shooting at some aspect of the new agency, calling its powers too broad or its structure too insular. Testifying later, Federal Reserve Chairman Ben Bernanke, FDIC Chief Sheila Bair and others were all asked whether they would take back some of the powers the administration wants to take from them and give to the new agency. As Frank predicted, they all agreed. That united opposition is one reason Treasury Secretary Timothy Geithner wants to move on reform by the end of the year. Bankers, brokers and even regulators all have reasons to resist change. The administration fears if reform slips into next year, it will only get harder. Darren Gersh, NIGHTLY BUSINESS REPORT, Washington.