WASHINGTON (Reuters) - President-elect Barack Obama said on Sunday he would put strong new financial regulation at the center of his economic recovery program to force more accountability on the banking industry.
Obama again warned that the U.S. economic crisis, which saw the country lose more than half a million jobs in November alone, would worsen before it gets better.
“As part of our economic recovery package what you will see coming out of my administration, right at the center, is a strong set of financial regulations,” Obama said in a taped appearance on NBC’s “Meet the Press” television show.
“Banks, ratings agencies, mortgage brokers, a whole bunch of folks (will) start having to be much more accountable and behave much more responsibly.
“We’ve got to have transparency, openness, fair dealing in our financial markets and that’s an area where I think over the last eight years we’ve fallen short.”
Obama, who takes office on January 20, began outlining his economic recovery plan on Saturday, saying he aims to create at least 2.5 million new jobs by 2011 and launch the largest U.S. infrastructure investment since the 1950s.
On Sunday he did not put a price tag on the plan, which analysts say could cost at least $500 billion. But he acknowledged the costs would be “substantial” and would hike the budget deficit at least in the short term.
“We’ve got to provide a blood infusion to the patient right now to make sure the patient is stabilized,” Obama said. “We can’t worry short term about the deficit ... We’ve got to make sure the economic stimulus plan is large enough to get the economy moving.”
Obama was disappointed that U.S. moves to avert a deeper crisis have so far done little to help average homeowners, and said he still regarded a possible moratorium on home foreclosures as an important policy tool.
Other options, such as encouraging banks to renegotiate mortgage terms with cash-strapped homeowners, could also help to strengthen the financial system, he said.
“Moving forward we have to have a housing component to any actions that we take. If we are only dealing with Wall Street and we’re not dealing with Main Street, then we’re only handling one half of the problem.”
He said that he supported efforts to help the struggling U.S. auto industry -- the target of a $17 billion emergency bailout proposal now making the rounds in Congress.
But he said federal help would hinge on the Big Three of General Motors Corp, Chrysler LLC and Ford Motor Co coming up with a sustainable business plan.
“I don’t think its an option to simply allow it to collapse. What we have to do is to provide them with assistance but that assistance is conditioned on them making significant adjustments. They are going to have to restructure and all of their stakeholders are going to have to restructure.”
Obama is expected to continue meetings with the Group of 20 leaders from major developed and emerging economies which began under President George W. Bush last month.
Reporting by Andrew Quinn; editing by Alan Elsner
Our Standards: The Thomson Reuters Trust Principles.