Obama wants more checks on Wall Street firms

Obama called for regulation to combat an "ethic of greed" among Wall Street investors

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IANS | 27 Mar, 2008
Democratic presidential hopeful Barack Obama Thursday called for revamping regulation of Wall Street firms to combat an "ethic of greed" among investors that has created an uneven economy and helped spark the current financial crisis in the US.

In a major economic policy speech in New York, Obama said the housing bubble and subprime mortgage crisis, which may have already led the US economy into recession, were a predictable consequence of the failure to keep tabs on the practices of investment banks and unscrupulous lenders.

"We encouraged a 'winner take all, anything goes' environment" in the 1990s through deregulation in a time of economic prosperity, Obama said and called for a new "21st century regulatory framework" in its place.

"Too often we've excused and even embraced an ethic of greed, corner cutting, insider dealing, things that have always threatened the long-term stability of our economic system," he said.

His speech came after Democratic rival Hillary Clinton and presumptive Republican nominee John McCain had both laid out in recent days their plans for revamping the economy.

Treasury Secretary Henry Paulson Wednesday acknowledged there should be greater oversight and supervision of investment banks after the Federal Reserve earlier this month opened up emergency loans traditionally reserved only for commercial banks.

US banks have reported more than $200 billion in write-downs amid a sharp drop in the value of mortgage-backed securities since the summer of 2007.

Obama called for greater aid to ordinary Americans and touted his plan for a $10 billion "foreclosure prevention fund" to combat a record number of homeowners threatening to default on their mortgages as a result of falling housing prices.

"Wall Street has been recently gripped by gloom over our economic situation, but for many Americans, the economy has effectively been in recession for the past seven years," Obama said.