With the health care debate receding, President Obama has stepped up his efforts to aid passage of comprehensive financial services regulatory reform. While most of the reform measures are aimed squarely at banks, the breadth of the proposed reforms may well encompass many activities currently performed by insurers. Indeed, while insurers may have avoided the purview of a proposed consumer financial products regulator, the issue of whether large insurers will have to help fund a bailout mechanism for systemically risky institutions remains an open question.

Speaking in New York in front of an audience containing financial services professionals, Obama sought to push back against intense lobbying against the legislation working its way through Congress. “A comprehensive plan to achieve these reforms has passed the House of Representatives. A Senate version is currently being debated, drawing on the ideas of Democrats and Republicans,” Obama said. “Both bills represent significant improvement on the flawed rules we have in place today, despite the furious efforts of industry lobbyists to shape them to their special interests. I am sure that many of those lobbyists work for some of you.”

Obama also laid out five primary elements of reform he would like to see. The pillars included: insulating taxpayers from bailouts; instituting the Volcker rule that limits the type and scale of risks banks can take; making derivates more transparent; protecting consumers; and giving investors more say over executive pay.

While acknowledging many of the reforms would be unpopular with financial services firms, Obama sought common ground. “We will not always see eye to eye,” he said. “We will not always agree. But that does not mean we have to choose between two extremes. We do not have to choose between markets unfettered by even modest protections against crisis, and markets stymied by onerous rules that suppress enterprise and innovation. That’s a false choice. And we need no more proof than the crisis we’ve just been through.”

 

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