Obama takes Wall Street to task for economic troubles

Business Materials 27 March 2008 19:16 (UTC +04:00)
Obama takes Wall Street to task for economic troubles

( dpa )- Democratic presidential hopeful Barack Obama on Thursday called for revamping regulation of Wall Street firms to combat an "ethic of greed" among investors that has created an uneven economy and helped spark the current financial crisis in the United States.

In a major economic policy speech in New York, Obama said that the housing bubble and subprime mortgage crisis, which may have already led the US economy into recession, was a predictable consequence of a failure to keep tabs on the practices of investment banks and unscrupulous lenders.

"We encouraged a winner take all, anything goes environment" in the 1990s through deregulation in a time of economic prosperity, Obama said and called for a new "21st century regulatory framework" in its place.

"Too often we've excused and even embraced an ethic of greed, corner cutting, insider dealing, things that have always threatened the long-term stability of our economic system." Obama said.

His speech came after Democratic rival Hillary Clinton and presumptive Republican nominee John McCain had both laid out their plans for revamping the economy in recent days.

Treasury Secretary Henry Paulson on Wednesday also acknowledged there should be greater oversight and supervision of investment banks after the US Federal Reserve earlier this month opened up emergency loans traditionally reserved only for commercial banks.

US banks have reported more than 200 billion dollars in writedowns amid a sharp drop in the value of mortgage-backed securities since the summer of 2007.

Obama called for greater aid to ordinary Americans and touted his plan for a 10-billion-dollar "foreclosure prevention fund" to combat a record number of homeowners threatening to default on their mortgages as a result of falling housing prices.

"Wall Street has been recently gripped by gloom over our economic situation, but for many Americans the economy has effectively been in recession for the past seven years," Obama said.