WRAPUP 1-Obama turns up pressure in financial reform push

* Big fight looms; debate focuses on “too big to fail”

* Some Republican support needed to pass Senate bill

* Bill would toughen oversight of banks, capital markets

By Caren Bohan and Kevin Drawbaugh

WASHINGTON, April 14 (BestGrowthStock) – U.S President Barack Obama
will try to turn up the pressure for an overhaul of Wall Street
regulations as he meets on Wednesday with top Democratic and
Republican lawmakers to discuss a sweeping package of reforms.

Republicans are seizing on a provision that would allow
regulators to step in to dismantle large, troubled firms. They
argue that would set the stage for “endless” bailouts of Wall
Street, a claim the White House says is false.

The White House meeting, at 10:45 a.m. (1445 GMT), will
include Senate Republican leader Mitch McConnell and House
Republican leader John Boehner. Obama’s Democrats will be
represented by Senate Majority Leader Harry Reid, House of
Representatives Speaker Nancy Pelosi and House Democratic
leader Steny Hoyer.

After a major victory securing landmark changes to the
healthcare system, Obama is shifting to financial reform as his
top legislative priority.

Obama administration officials have argued that passing a
financial reform bill is crucial to preventing a repeat of the
2008-2009 turmoil that led to the worst U.S. recession since
the 1930s Great Depression.

“I do not think there is a tenable position that anyone
could take … that says we don’t need to fix the system, to
reform the system,” U.S. Treasury Secretary Timothy Geithner
said in a panel discussion on Tuesday. “Look at the devastation
caused by the financial crisis. Look at the damage it did to
the lives of millions of Americans.”

But a big fight looms as Senate Democrats seek to pass a
final bill by the end of this month. The House passed a version
of the measure in December.

Obama needs at least some Republican help to pass it in the
Senate and is targeting moderate Republicans such as Senators
Judd Gregg and Bob Corker, who have signaled some willingness
to work on a bipartisan bill.

“We think this is a choice that each individual Republican
is going to have to make,” White House deputy communications
director Jen Psaki said.

Describing the purpose of Wednesday’s meeting, Psaki said,
“We wanted to bring all parties to the table to have a
conversation about how to move forward toward a strong bill.”


At stake are the shape and profitability of the financial
services industry for years to come, as well as the U.S.
economy’s ability to withstand future financial crises.

In addition to creating a “resolution authority” to wind
down failing financial firms, the bill would toughen oversight
of banks and capital markets and beef up protections for
consumers of financial products.

But the question of what to do about “too big to fail”
financial firms has emerged as a central issue in the debate.

The Obama administration says the resolution authority is
needed to prevent a repeat of the global market catastrophe
that followed the September 2008 collapse of investment bank
Lehman Brothers and the near-failure of insurer AIG.

McConnell admonished his fellow Republicans against passing
the Democratic version of the bill and took aim at the
resolution authority provision.

“It provides for an endless taxpayer bailout of Wall Street
banks,” McConnell said, adding that was “the one thing the
American people have said they don’t want to happen again.”

In a blog posting on the White House website, Psaki labeled
such criticism “false” and accused Republicans of attempting a
poll-tested political strategy of trying to link the bill to
the unpopular $700 billion rescue of Wall Street passed during
Republican President George W. Bush’s administration.

“The Senate bill explicitly mandates that a large financial
firm that faces failure will be allowed to fail, and it
explicitly prohibits the use of any funds to ‘bail out’ a
failing firm,” Psaki said. “Large financial firms, not
taxpayers, will be required to bear the costs.”

(Writing by Caren Bohan; Editing by Peter Cooney)

WRAPUP 1-Obama turns up pressure in financial reform push