WASHINGTON (Reuters) - The Bush administration’s plans to shake up U.S. financial market regulation are “too short on action,” Democratic presidential candidate Hillary Clinton said on Sunday, laying out her own set of proposals to address the issue.
Clinton, a U.S. senator from New York, called for new standards governing mortgage lenders, reform of rating agencies to avoid conflicts of interest, a 30 percent annual interest rate cap on all credit cards and more immediate authority for the Federal Reserve to regulate financial institutions.
Her comments, made to Reuters in an interview, came a day before U.S. Treasury Secretary Henry Paulson unveils proposals for broad reform of financial regulation.
“There is still a very serious gap between what the administration is proposing and the immediate crisis that we face,” Clinton told Reuters.
“Although I appreciate and agree with some of the recommendations, the blueprint is simply too short on action,” said Clinton, who is battling Illinois Sen. Barack Obama to become the Democratic nominee for November’s presidential election.
Clinton called for new legislation to make mortgage originators — people or organizations that start the process of organizing a loan — subject to minimum licensing, supervision and capital requirements similar to rules that apply to banks.
She dismissed the Bush administration’s proposal to establish a commission on the issue as “too little too late.”
Obama has also proposed greater government regulation of the U.S. financial system and has called Paulson’s proposals related to the Fed inadequate.
Arizona Sen. John McCain, who has wrapped up the Republican presidential nomination, said through a spokeswoman he would study the administration’s proposals.
Clinton, who has argued she is better placed than Obama or McCain to steer the U.S. economy, accused her Republican rival of doing nothing.
“We cannot afford the administration’s approach of ‘wait and don’t see.’ We can’t afford Senator McCain’s approach of sitting on his hands,” she said.
Credit ratings agencies should stop being compensated by the institutions they rate, she said, or else face new guidelines to ensure their independence.
Those guidelines could include proving they follow independence standards adopted by the Securities and Exchange Commission or creating an independent rating agency ombudsman approved by the SEC.
“We should just stop talking about conflicts of interest and failures of the rating agencies and do something about it,” Clinton said.
The former first lady, who often mentions the cheap loans she took out to attend law school, took aim at credit card companies, calling for a 30 percent annual interest rate cap, which she said she would try to bring down even further.
She said the Fed and the Treasury Department should issue new rules within 90 days that apply to all institutions that have access to the Fed’s credit.
“They have to regulate all of the new institutions that are not commercial banks in order to have the transparency and the accountability that you need,” she said.
Clinton declined to comment on whether she would reappoint Federal Reserve Chairman Ben Bernanke if she were elected president.
“I think that he inherited some difficult problems,” she said. “He’s obviously aware of the move toward greater regulation, but no one is yet meeting the immediate needs in the way that I think we should.”
Editing by Frances Kerry