VOA常速英语:Congressional Democrats Propose New Financial Regulations

Legislation proposed this week by U.S. Senator Christopher Dodd could result in big changes in the way financial institutions do business.  Dodd, the Democratic Party chairman of the Senate Banking Committee, says the bill expands the Federal Reserve's role in policing large financial institutions and creates a new consumer protection agency.  But some predict a tough battle for the bill to pass.  

Democrats are moving forward with what they call "the most sweeping financial reforms since the Great Depression." 

Senator Christopher Dodd, who sponsored the bill, says the financial meltdown that led to the collapse and subsequent bailouts of some of the largest U.S. firms shows the current regulations are inadequate. "We have learned the kind of condition we are in is because either we didn't have regulation or that the regulators we had weren't doing their job," he said.

Dodd says the failures have hurt middle class Americans the most. "The far worse damage has been done to millions of American families who did nothing wrong at all.  A staggering 8.4 million jobs have been lost and the unemployment rate remains near double digits," the senator noted.

To avert a future crisis, Dodd proposes an expansion of the Federal Reserve's authority.  Besides giving the central bank the power to limit institutional risks, the proposal gives the Fed the ability to break up large institutions considered "too big to fail."  It also creates a new consumer protection agency that will approve and enforce financial products.  But some are doubtful the reforms will work.

"At the end of the day, the investment bankers and the financial engineers still have the ability to go out and create products that nobody understands," said Boston University School of Law professor Cornelius Hurley.

Banking lobbyists argue the bill will hurt families and businesses because it will force banks to tighten credit.  But Brookings Institution banking expert Doug Elliott says the trade off will be increased security. "It was so expensive to clean up after this crisis, we need more safety - even if it makes loans a little more expensive," he said.

Republican Senator Bob Corker, who was involved in bipartisan negotiations before the talks broke down, said the plan faces a tough fight in the Senate. Among Republican concerns: that the new consumer watchdog will have too much authority to ban financial products.  

In a statement issued Monday, President Obama promised to work with Senator Dodd to defeat any efforts to weaken the bill.  

Dodd has pledged to pass the new regulations this year.