Obama to target wayward finance sector: Summers

Sunday, April 19, 2009 at 9:28 PM Posted by Beijing News


With the recession-hit US economy facing "substantial" downside risks, a top White House advisor Sunday said President Barack Obama plans to rein in the US financial sector, which has been blamed for the economic meltdown.

Obama's chief economic adviser Larry Summers told NBC television that the US leader "is pushing very hard for a very strong program of regulation... on a whole set of issues that have to do with credit card abuses."

The new regulations will target, among other concerns, "the way people have been deceived into paying extraordinarily high rates that they wouldn't have paid if they knew what they were getting themselves into," Summers said.

While there have been early signs of economic revival, "we have got a long way to go," Summers said, adding that the administration is mindful that "there are still substantial risks, that there are downside contingencies that we've got to prepare for, that there are issues in the global economy."

His words echoed remarks made by Obama in an interview published Sunday in which the US president cautioned that, encouraging signs notwithstanding, "risks remain real and significant" and warrant "aggressive action."

"My hope is that by taking the steps we are taking today, from stabilizing our financial system to helping our auto industry restructure to become more competitive, it will help speed the day that the government can get out of the way and let the private sector do what it does best -- innovate, create jobs, and grow the economy," Obama told Fortune magazine.

Warnings of continued economic turbulence come amid rising fears that the US economy could face defaults on billions of dollars in consumer credit card debt, inflicting another massive blow on the heels of the home mortgage crisis.

US banks are accused of having drastically increased interest rates and fees on credit card users, even though many of the credit companies have received federal assistance intended to encourage them to loosen lending.

"We're going to need a less leveraged economy," Summers said.

"That means... a much better regulated financial system, and that's what the president is already hard at work on."

Meanwhile, White House chief of staff Rahm Emanuel on Sunday hailed administration steps taken so far to right the US economy, just 90 days into the Obama presidency.

"First, we passed the largest recovery act to put Americans back to work. We've gotten in place the financing to help stabilize the credit system throughout the financial system," as well as "a housing plan so people can keep their homes, and millions of Americans can refinance," he told ABC television.

Emanuel added that he does not believe it will be necessary to ask Congress for more money to bail out US banks, as the government prepares to reveal details about the health of 19 ailing banks following the completion of a set of "stress tests" on the industry at month's end.

"We believe we have those resources available in the government as the final backstop to make sure that the 19 are financially viable and effective," Emanuel said.

"We have a facility to buy these troubled assets off their banks. If they need capital, we have that capacity."

For his part, Obama -- who spent Saturday and Sunday attending the Summit of the Americas in Trinidad and Tobago -- said that stress test results likely will vary widely because "banks are in different situations."

"They're going to need different levels of assistance from taxpayers and as I've said before, if taxpayer money is involved then I have the responsibility to ensure some transparency and accountability in the operations of those businesses," he said.

All the same, he said, "we don't know what we don't know: We can't know with certainty what's going to happen next, and there certainly are real risks ahead."





Bodybuilders compete in the Open Kiev Cup for Bodybuilding competition in Kiev. AFP/Sergei Supinsky

0 comments:

Post a Comment

Subscribe to: Post Comments (Atom)