New Financial Team to Tackle Obama’s Calls for Oversight

JEFFREY BROWN:

As the financial crisis fallout spreads and the Bernard Madoff scandal deepens, President-elect Obama used today's announcement of new appointees to talk about the need for stronger regulatory oversight.

U.S. PRESIDENT-ELECT BARACK OBAMA:

And if the financial crisis has taught us anything, it's that this failure of oversight and accountability doesn't just harm individuals involved. It has the potential to devastate our entire economy, and that's a failure we can't afford.

I think the American people right now are feeling frustrated that there's not a lot of adult supervision out there.

JEFFREY BROWN:

The crisis, which began in the housing market and quickly spread throughout Wall Street and beyond, has prompted numerous questions about both the players who helped caused it and the regulatory regime that allowed it to happen.

The president-elect weighed in on some of those questions today.

BARACK OBAMA:

We have been asleep at the switch, not just some of the regulatory agencies, but some of the congressional committees that might have been taking a look at this stuff. We have not been as aggressive, and we've had a White House that started with the premise that deregulation was always good.

JEFFREY BROWN:

Mr. Obama referred directly to the scandal involving Madoff, who's been arrested for allegedly creating a Ponzi scheme that may have cost investors tens of billions of dollars.

BARACK OBAMA:

Charities that invested in Madoff could end up losing savings on which millions depend, a massive fraud that was made possible in part because the regulators who were assigned to oversee Wall Street dropped the ball.

Financial regulatory reform will be one of the top legislative priorities of my administration.

JEFFREY BROWN:

One of the agencies under heavy fire, the Securities and Exchange Commission, which now appears to have ignored warning signs about Madoff and has been accused of missing simmering fires on Wall Street before the financial crisis.

BARACK OBAMA:

I'd like Mary to step up and say a few words.

JEFFREY BROWN:

Today Mr. Obama selected Mary Schapiro to chair that agency.

MARY SCHAPIRO, financial regulator: This is a perilous time for investors. Americans are looking to policymakers and regulators to restore stability and trust to our financial markets.

JEFFREY BROWN:

Schapiro served as an SEC commissioner from 1988 to 1994. She also chaired the Commodity Futures Trading Commission and currently heads the Financial Industry Regulatory Authority, the industry's self-regulating organization.

Today she promised tougher oversight.

MARY SCHAPIRO:

Investor trust is the lifeblood of our financial markets. The only way to restore the trust that has been lost is through effective, thoughtful reform of our regulatory structure and the consistent and robust enforcement of our financial regulations. And this will be my top priority.

JEFFREY BROWN:

The president-elect also tapped Gary Gensler to head the Commodity Futures Trading Commission. He worked for the Treasury Department under President Clinton.

And Daniel Tarullo, who served as an economic adviser to Clinton, as well as to President-elect Obama, was nominated to an open seat on the Federal Reserve Board in Washington.

Mr. Obama said that tougher regulation, while needed, would not be enough.

BARACK OBAMA:

But government is not going to be able to do it alone. And so, in the context of the financial markets, for example, there needs to be a shift in ethics on Wall Street.

JEFFREY BROWN:

Today's nominees are subject to Senate confirmation.