Nationalizing the banks

WASHINGTON -- Setting up a certain fight with big business, President Obama is proposing a new regulatory agency to police lenders and protect consumers in credit, savings and other banking transactions .

The consumer agency and a newly empowered Federal Reserve will be two of the central elements of a broad overhaul of the financial regulatory system that the president will announce on Wednesday, officials said.

Already the nation's central bank, the Federal Reserve would supervise large financial institutions that are considered so big that their failure could undermine America's economy, according to the administration proposal.

Obama's decision to create a consumer agency comes amid criticism that mortgage lenders and credit card companies have taken advantage of unwitting customers and saddled them with debt. The financial crisis was precipitated in part by the preponderance of securities backed by mortgages that went sour when the housing market collapsed.

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And what was the main cause of the housing market collapse? Subprime lending encouraged and regulated by the federal government. Can the same government that has bankrupted Social Security and Medicare regulate the financial markets?

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