The Obama administration intends to quickly put new rules for the financial marketplace into action but won't swamp Wall Street with red tape, U.S. Treasury Secretary Timothy Geithner assured investors Monday.
Amid rising doubt about the recovery's durability and Washington's economic stewardship, Geithner traveled to New York to meet Mayor Michael Bloomberg and captains of industry to calm fears that new rules will crimp their competitiveness.
He said the administration would lay out a new set of regulations rather than "layer new rules on top of old".
"We will move as quickly as possible to bring clarity to the new rules of finance," he said in prepared remarks for delivery at an event sponsored by New York University. "We will not risk killing the freedom for innovation that is necessary for economic growth."
President Obama signed a huge 2,300-page package of financial regulatory reforms -- prompted by lawmakers' anger at Wall Street's role in precipitating the 2007-2009 financial crisis -- into law last month but it is largely a work in progress since rules to implement it are still being drawn up.
HURRY TO TAMP DOWN UNCERTAINTY
Geithner said Treasury will try to speed up the rule-making process. That would reduce the period of uncertainty for banks and other businesses but also mean lobbyists for the financial industry would have less time to influence the rules.
"The rule-writing process traditionally has moved at a frustrating, glacial pace," Geithner said. "We must change that."
Geithner was effectively extending an olive branch to Wall Street banks that fought against tightening financial rules, saying it was necessary to balance protection for consumers against businesses' drive to create new products and boost profits.
With the political season ahead of November congressional elections heating up, some Republicans claim that business worries about how the new rules will affect them is causing some to delay hiring and making a bad economic situation worse.
A Reuters-Ipsos poll last week pointed to trouble for Democrats in the Nov. 2 elections. It showed a majority of Americans think the Obama administration has not focused enough on job creation.
The U.S. unemployment rate remains at a lofty 9.5 percent but much of the administration's effort this year has been directed at securing passage of healthcare reform and new financial regulations as well as jobs.
RULES HAD TO CHANGE
Geithner said the financial overhaul was necessary.
"Our system allowed too much freedom for predation, abuse and excess risk, but as we put in place rules to correct for those mistakes, we have to strive to achieve a careful balance and safeguard the freedom, competition and innovation that are essential for growth," he said, according to excerpts provided by the U.S. Treasury.
He suggested there could be benefits for business by eliminating some old rules, though he didn't publicly specify which ones.
"Alongside our efforts to strengthen and improve protections for the economy, we will eliminate rules that did not work. Wherever possible, we will streamline and simplify," he said in his prepared remarks.
Geithner met privately with executives from the finance industry, the retail sector and real estate ahead of his New York University address. Among those scheduled to attend a lunch were Laurence Fink of BlackRock, Donald Marron of LightYear Capital, Eric Mindich of Eton Park Financial Management and James Tisch of Loews Corp. (Reporting by Glenn Somerville and Tim Ahmann; Editing by Andrew Hay)