U.S. President Barack Obama will lay out broad principles on Wednesday for Wall Street regulatory reform, following up on his promise to plug a hole in U.S. oversight of the financial industry that helped lead to the current crisis.
Below is an overview of those principles based on excerpts of the president's remarks and information from an administration official:
* Financial institutions that pose serious risks to U.S. markets should be subject to strong governmental oversight. The Federal Reserve should actively monitor the risk-taking of institutions it supports with last-resort lending.
* The U.S. regulatory system and major financial markets must be strong enough to survive stress and the failure of large institutions. Modernizing and streamlining U.S. regulatory structure is required to ensure that.
* Better efforts are required to promote transparency and encourage the use of plain language throughout the financial system.
* Financial products marketed to investors also must be subject to strong and uniform supervision based on actual data on how people make financial decisions.
* Accountability is required from top executives of financial institutions. They must be held responsible if they violate the public trust.
* The U.S. system of regulations should cover all appropriate institutions and markets without gaps and ensure that companies cannot cherry-pick among competing regulators.
* High global regulatory standards are as important as high U.S. regulatory standards. The United States should challenge the world to follow its lead in setting such guidelines to prevent financial crises from spreading.
(Reporting by Jeff Mason in Washington; Editing by Bill Trott)