Talk Radio News Service: News, Politics, Media

By Leah Valencia, University of New Mexico - Talk Radio News Service

Treasury Secretary Timothy Geithner urged Congress to act quickly in executing a comprehensive overhaul of the financial regulatory system, telling members of the House Financial Services Committee on Wednesday that, "Time is the enemy of reform."

Geithner said lawmakers must act to correct the regulatory problems that have left the financial system in disarray.

"As some normalcy returns to our financial system and our economy, we cannot let it be cause for complacency," he said in a hearing on Capitol Hill. "We simply cannot walk away from the worst financial crisis since the Great Depression and not do everything in our power to reform the system."

Geithner explained that the regulatory reform plan proposed in June by the Obama administration aims to achieve three main goals, including providing consumer protection, creating a new financial system less prone to crisis and safeguarding taxpayers from bearing costs of future crises.

A key aspect of the proposal seeks to merge the Office of the Comptroller of the Currency and the Office of Thrift Supervision into a new consumer financial protection agency. Lawmakers from both parties raised concerns about such an agency.

House Financial Services Chairman Barney Frank (D-Mass.) wrote proposed changes to the consumer agency in a memo Tuesday. The changes excluded a range of non-financial businesses, such as retailers and auto dealers, from oversight by the agency. Frank also said he plans to fund the agency in a way that would not burden financial institutions, and will no longer require them to offer "plain vanilla" financial products, such as 30-year fixed mortgages.

Geithner said in his testimony that all institutions providing financial credit should be subject to the same regulation and credit standards as banks, but he did not indicate whether these standards would extend to non-financial businesses

"If you are in the business of providing financial credit and you are competing with banks and thrifts to do that, there should be a common set of standards," he said. "In general, we're very supportive of the changes proposed by the chairman."

Frank said he will be holding a series of hearings on the regulatory proposal in coming weeks and plans to have legistlation in the House and Senate by the end of the year.

"This is going to be a very time-consuming committee in October and November," Frank said.

The new legislation would mark the most drastic governance changes for financial institutions implemented in seven decades.