SME Times - Obama Seeks Passage of Finance Reform Bill, Obama Urged The Senate To Pass a Massive Financial Reform Bill, US President Seeks Passage of Finance Reform Bill

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DPA | 23 Apr, 2010
The US President Barack Obama urged the Senate on Thursday in Washington to pass a massive financial reform bill that would place new regulations on Wall Street designed to prevent the risky practices that sparked a worldwide economic downturn two years ago.

Speaking in New York near Wall Street, Obama warned that the failure to shore up the financial system could open the door to another economic meltdown just as the US and global economy are showing signs of recovery.

"It is essential that we learn the lessons of this crisis, so we don't doom ourselves to repeat it," he said. "And make no mistake, that is exactly what will happen if we allow this moment to pass."

The House of Representatives passed the legislation last year, but it has stalled in the Senate, which has begun to take up the measure. Opposition Republicans have attacked the bill over the possibility it could establish more taxpayer-funded bailouts, but have recently signalled a willingness to work with Obama and Democrats to approve the package.

The bill could create a new consumer protection agency in the Federal Reserve to curtail risky and abusive loan practices. It would enact oversight of the massive derivatives market and give the government the authority to wind down troubled financial institutions. Obama argued it will bring greater transparency to financial markets.

"We need to enact a set of updated, common sense rules to ensure accountability on Wall Street and to protect consumers in our financial system," he said.

Obama and the Democrats hope to capitalise on public anger toward Wall Street to get the bill through Congress ahead of November's mid-term elections.

The Senate bill would create a standing $50-billion fund for the government to use in the event future rescues of the financial sector are necessary. Although banks could contribute to the fund, Republicans fear it would institutionalise government bailouts to the detriment of taxpayers.

Republicans, however, have expressed more backing for the measure after Treasury Secretary Timothy Geithner signalled the administration was not wedded to the idea of setting up the fund.