White House renews regulatory push on anniversary of meltdown

President Barack Obama will head to Wall Street on Monday to give what
is being billed as a major speech one year after the worst of the financial
crisis began.

The president is expected to renew his push for stricter financial regulations in an effort to prevent future crises. Regulatory reform has been overshadowed for months by the fierce debate over healthcare reform.

{mosads}The administration has released hundreds of pages of draft legislation that would, among other things, create a new government agency on consumer financial protection, restrict the market for financial derivatives and empower the Federal Reserve to oversee broad risks in the financial system.

Many parts of the plan have run into stiff resistance from the financial industry, most notably the administration’s desire to set up a Consumer Financial Protection Agency.

White House press secretary Robert Gibbs on Friday said Obama’s message will be to assure Americans that “what happened a year ago never happens again.”

Gibbs said Obama will emphasize “why it’s so important, why we need to move ahead and why we can’t wait.”

But Obama’s push will be challenged by a collection of interest groups that oppose aspects of his reforms and a mix of Republicans and Democrats who have different ideas on how to prevent future crises.

The U.S. Chamber of Commerce is leading a group of lobbying associations in a multimillion-dollar campaign against the plan that includes grassroots mobilization and advertising. The industry argues that the new consumer protection agency would hurt innovation in the financial industry and increase costs on consumers. The vast majority of Republicans are opposed to that agency as well, and some regulators have raised questions about it.

Key Democrats also differ on parts of the administration’s agenda. Obama’s call for a “systemic risk regulator” in the Federal Reserve has run into opposition from members who fear the Fed’s powers are already too great. House Financial Services Committee Chairman Barney Frank (D-Mass.), for example, has said systemic risk should be an authority shared with other entities.

Obama’s call for a new agency to oversee consumer financial products has also drawn criticism from banking interests and Capitol Hill.

Frank and Senate Majority Whip Dick Durbin (D-Ill.) have both threatened to reintroduce legislation that would empower bankruptcy judges to rewrite the terms of primary home mortgages.

Such legislation is seen a stronger stick to force the industry to modify loans. The legislation is highly controversial and fiercely resisted by the financial industry, which calls the bill “cramdown.”

The administration has not strongly backed such a push, however, and an earlier effort to pass the policy failed in the Senate by a 15-vote margin earlier this year.

Frank is planning to pass regulatory reform legislation this fall. Senate Banking Committee Chairman Chris Dodd (D-Conn.), who decided to retain the committee gavel instead of assuming the chairmanship of the healthcare committee, intends to pass one comprehensive bill by the end of this year or early next year.

The president will speak nearly one year to the day after Lehman Brothers collapsed from billions of dollars of bad debt after the government decided not to rescue it.

{mosads}The event triggered other failures on Wall Street, and the Bush administration, Congress and Federal Reserve took unprecedented steps to rescue some of the nation’s biggest firms, including AIG, Citigroup and Bank of America. Congress approved a $700 billion program that allowed the Treasury to help hundreds of other financial institutions.

Obama supported the bailouts as a candidate, and in his first few months in office his administration continued efforts to resolve the financial crisis. Most notably, the Treasury Department under Obama implemented “stress tests” on the nation’s banks that are now seen as boosting confidence in the financial sector.

Administration officials increasingly argue that while unemployment continues to mount, the worst of the financial crisis has passed. On Thursday, Treasury Secretary Timothy Geithner said the government’s rescue efforts were entering a “new phase” of recovery and that the government will unwind some of the efforts to support private markets.

The administration also has been on the offensive in promoting the merits of the $787 billion economic stimulus package. Christina Romer, chairwoman of the White House Council of Economic Advisers (CEA), told The Hill on Saturday that a “reasonable range” of jobs saved by the stimulus was 600,000 to 1.2 million.

Republicans in the Senate and House have described the stimulus as a bust and ridiculed estimates by the White House of jobs saved.

They have also criticized many of the government’s steps to bail out financial firms and auto companies, and will hold their own press conference on Tuesday on the one-year anniversary of Lehman’s collapse.

Gibbs said Obama on Monday will focus on the progress the country’s financial markets have seen since the depths of the financial crisis. Stock markets have been on a near-continuous rally since March.

Obama will “outline the progress we’ve made in stabilizing our financial system” and emphasize the need to pass his reforms, Gibbs said.

Walter Alarkon contributed to this story.