The chairman of the U.S. Senate Banking Committee, Christopher Dodd, blasted banks and Wall Street on Thursday for a refusal to work with Congress on financial reforms that borders on insulting to the American people.
Criticizing financial firms for hiring an army of lobbyists to fight reforms, Dodd opened a hearing with banking executives by saying the Obama administration's new proposals to limit the size and risk-taking of big banks were on the right track, but will be no easy feat to implement.
At the hearing, a prominent Goldman Sachs Group executive expressed support for some of the financial regulatory reforms being considered by Congress since taxpayers bailed out Goldman and other similar firms.
Gerald Corrigan, a managing director at Goldman who is a former president of the U.S. Federal Reserve Bank of New York, said he backs creating a systemic regulator to monitor the economic big picture, as well as raising capital and liquidity standards for banks. Both proposals have wide political support.
He said the government needs a way to dismantle large, troubled financial firms in an orderly fashion, another idea that looks likely to be approved by Congress early this year as part of a broad overhaul bill.
Corrigan also said more global cooperation is needed on accounting, bank supervision and economic policies.
He stressed the importance of mark-to-market accounting, or pricing assets at market value, and said tightening the Federal Reserve's emergency lending authority would reduce the probability of future financial crises.
Corrigan is a member of the Group of Thirty, a non-profit organization of bankers, financial regulators and academics chaired by Paul Volcker, the former Fed chairman who is now a top economic adviser to President Barack Obama.
Thursday's hearing was the second of two this week held by the banking committee on the proposals made by Obama last month to limit proprietary trading by banks, remove them from the hedge fund business and limit their growth.
John Reed, a former top executive at Citigroup Inc , also testified on Thursday, calling for stronger capital and liquidity standards, more exchange-trading of financial products and a compartmentalized financial industry.
Reed also advocated establishing a regulator for consumer finance, saying, There is a good reason to create a Consumer Protection Agency with a clear and separate mandate.
Creation of an agency to shield Americans from abusive mortgages, credit cards and other financial products is one of the Obama administration's most controversial proposals for tighter financial oversight.
(Editing by Leslie Adler)