The entire financial services industry got a regulatory nastygram from the administration at 2 p.m. today when President Obama unveiled his proposal for financial regulatory reform legislation, urging Congress to pass the package by year's end.
In the hot seat are the financial institutions that peddled risky loans, crummy credit card terms, over-the-counter derivatives, and those pesky credit default swaps -- products and practices that, in words Obama used earlier this year, triggered "a cascade of mistakes and missed opportunities" that resulted in economic crisis.
Today's message: Sorry, boys, regulation is back.
The proposal is about protecting consumers: watching our backs when we get mortgages, sign up for credit cards, and shop for insurance. It's also about protecting our way of life. Included in the proposal are sweeping regulatory changes for the institutions that exposed our economy to untold risks.
Legislation like this affects all of us. And right now, you have the opportunity to truly affect the outcome of the new world financial order.
The Motley Fool was selected by the White House to sit down with a member of the President's Council of Economic Advisors on Tuesday to discuss the proposal. More on that -- and how you can be involved in our trip -- in a moment. But first, let's roll the tape.
White House to financial institutions: No more shenanigans!
Here's the upshot: The administration wants to create a single agency to set rules and regulations regarding transparency, accountability, and fairness in financial products to protect consumers.
In a video released this morning, Austan Goolsbee, senior economic advisor to the Prez, set the stage for the president's 2 p.m. briefing. It's all about consolidation -- moving consumer protection authority out of seven separate agencies and giving authority and accountability to a new consumer protection agency (the Consumer Financial Protection Agency, or CFPA).
The CFPA will also contain a Financial Services Oversight Council, whose responsibilities will include being a watchdog for institutions that have the power to bring down the entire system, identifying regulatory gaps, and keeping abreast of financial innovations.
In other words, the next "credit default swap" isn't going to slip by unnoticed. "Too big and failing" is not an option, and Daddy is going to take away your car keys and ground you before he'll ever bail you out of jail again. (You can read the official White Paper on Financial Regulatory Reform here.)
Uncle Sam needs Fools!
Shockingly (not!), the White House is getting a lot of pushback from financial institutions.
During a pre-announcement press conference call, Goolsbee revealed that the financial industry's block-and-tackle efforts make health-care lobbyists look amateurish by comparison.
Translation: We need you, dear voting public. "The president is looking to amp up the public pressure on what changes are needed," Goolsbee said. "It's really important that we keep the focus on what is in the public interest. Without that focus, this thing becomes just another bill that is down in the bowels of the banking and finance committees."
A call for questions/comments
In recognition of the engaged intelligence of the Motley Fool community, we have been selected by the White House to sit down with a member of the President's Council of Economic Advisors on Tuesday to discuss the proposal.
This is Washington's way of saying that they value the community of investors that gathers here at Fool.com. We've got plenty of questions about the White House's financial reform plans, but as ambassadors of Fool.com, we want your voice to be heard.
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