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FACTBOX-Key players in reshaping U.S. financial regulation

Published 06/15/2009, 05:35 PM
Updated 06/15/2009, 06:25 PM
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WASHINGTON, June 15 (Reuters) - Key figures determined to overhaul America's financial regulation system range from a young president facing a variety of crises to veteran policy-makers who have been tested by past financial downturns.

BARACK OBAMA, PRESIDENT

The U.S. president is determined to rein in the deregulated financial services sector and end a free-wheeling period blamed by some for the financial crisis behind the recession. Many Democrats in Congress agree with him.

Obama, a community organizer and civil rights lawyer before entering the Senate in 2005, has already signed into law a bill to curb sudden interest rate increases on credit cards and his administration is moving to keep a closer eye on over-the-counter derivatives and other complex financial instruments.

Two of his senior officials said in an opinion piece on Monday that reform would mean higher capital and liquidity requirements and that firms that are too big to fail would face additional scrutiny.

BEN BERNANKE, FED CHAIRMAN

The soft-spoken Bernanke studied the Great Depression in graduate school, preparing him for today's crisis.

Unlike his 1930s predecessors, Bernanke has turned on the money taps to flood the system with liquidity while slashing interest rates to spur the economy and fight deflation. He has also warned that big deficits would inevitably drive up interest rates.

Before taking the reins at the Fed in February 2006, he briefly headed President George W. Bush's Council of Economic Advisers. Before that, he had three years of service on the Fed Board, adding practical policy experience to his earlier theoretical work as an academic at Princeton University.

A sober-sided "gray man" in appearance, Bernanke is plain-spoken, in contrast to predecessor Alan Greenspan, whose obscure policy pronouncements often perplexed his listeners.

TIMOTHY GEITHNER, TREASURY SECRETARY

Geithner, who worked with his one-time boss Lawrence Summers to explain the administration's financial regulation reform proposals in a Washington Post op-ed, has a reputation of being cool under pressure. And there's plenty of pressure.

He also has the unenviable job of helping the president keep down expectations of a quick recovery. Geithner told a New York audience on Monday that the financial system was beginning to improve but that unemployment will likely rise more.

As president of the New York Federal Reserve Bank, Geithner was closely involved in the rescue of Citigroup Inc , as well as the bailouts of Bear Stearns and American International Group . But his reputation was tarnished by his involvement in the decision to let investment bank Lehman Brothers fail, a step blamed by some for plunging an already fragile financial system into a downward spiral.

Previously, Geithner played a big part in shaping U.S. policy during the Asian and Russian economic crises in 1997-1998, when he was in his late 30s.

Geithner also worked at the International Monetary Fund, where he directed the Policy Development and Review Department from 2001-03. He studied Japanese and Chinese, and has lived in East Africa, India, Thailand, China and Japan.

LAWRENCE SUMMERS, DIRECTOR OF NATIONAL ECONOMIC COUNCIL

Summers, who co-authored the Washington Post op-ed on regulation reform, might have been Obama's treasury secretary but for an unfortunate 2005 comment that women have less innate ability in science than men. Instead, he heads the National Economic Council, a job that did not require Senate confirmation.

Summers, who was Treasury secretary from 1999 and 2001, has a reputation for brilliance as well as not suffering fools gladly. He advised the president during the election campaign, and some had thought he might return to his old job at Treasury. Like Geithner, Summers is a time-tested crisis manager who gained experience helping direct the U.S. response to the Asian financial crisis in the late 1990s as the No. 2 Treasury official under then-Secretary Robert Rubin.

He earned a Ph.D. in economics from Harvard in 1982 and taught there and at the Massachusetts Institute of Technology. Summers was the World Bank's chief economist from 1991 to 1993.

MARY SCHAPIRO, SEC CHAIRMAN

Schapiro came on board facing the prospect of overseeing the shuttering of the Securities and Exchange Commission amid criticism that it mishandled the gravest financial crisis since the Great Depression.

That idea has since been pushed aside, and Schapiro, a former SEC commissioner who has spent more than two decades advancing through the U.S. financial oversight bureaucracy, may oversee the SEC's expansion. She has called for more oversight of asset-backed securities, credit default swaps and other, less-regulated pools of capital. Geithner has said the administration would like to give the SEC power to give shareholders more say over executive pay.

Schapiro has also chaired the futures-market regulating Commodity Futures Trading Commission. She most recently was chief executive of a brokerage watchdog group, the Financial Industry Regulatory Authority. Schapiro came to the job with plenty of critics. Some said she was not a reformer, beholden to too many in a broken system, while others said FINRA had a mediocre enforcement record.

The fact that she worked at both the SEC and CFTC led some to speculate that Obama planned to merge the two regulatory agencies -- an idea that has been kicked around for years.

SHEILA BAIR, CHAIRMAN OF FEDERAL DEPOSIT INSURANCE CORP

As financial regulators were skewered last year for going too easy on regulation, Sheila Bair emerged as an unflappable figure with a tough-love approach to the banks she supervises as head of the Federal Deposit Insurance Corp.

A self-described moderate Republican and former academic, she clashed with the Bush administration by pleading for more federal help for troubled homeowners in the mortgage crisis and openly criticizing the banking industry. In 2008, Forbes magazine ranked her as the second-most-powerful woman in the world -- a distinction she thought was a mistake when she got a phone call about the award.

The Kansas native, a Republican whose term ends in 2011, was a university professor before coming to the FDIC. Previously she worked in the Treasury Department and for the New York Stock Exchange.

GARY GENSLER, CHAIRMAN OF COMMODITY FUTURES TRADING COMMISSION

A former Treasury undersecretary, Gary Gensler is expected to play a key role in efforts to regulate the over-the-counter derivatives market. Ironically, Gensler was part of the Treasury Department when it helped get a law enacted that exempted credit default swaps from tougher regulation.

Gensler was a partner at Wall Street giant Goldman Sachs by age 30 and has been a critic of mutual funds.

He advised former Maryland Democratic Sen. Paul Sarbanes on the post-Enron Sarbanes-Oxley corporate governance and auditing reforms. He was a senior adviser to New York Democratic Sen. Hillary Clinton's presidential campaign.

CHRISTOPHER DODD, CHAIRMAN OF SENATE BANKING COMMITTEE

Christopher Dodd, the silver-tongued, white-haired chairman of the Senate Banking Committee, faces a tough re-election race for his Senate seat in Connecticut.

After more than a quarter-century in the Senate, few know better than Dodd the inner workings of an institution known derisively by some as the place where bills go to die. Dodd knows the markets and banking well, coming from a state loaded with headquarters of hedge funds, insurance companies and other giants of the financial services industry.

Dodd is known as a centrist who can steer a bill to the Senate floor. Whether he can overcome Republican opposition there to Democratic reforms will be crucial to efforts to tighten a financial oversight system in crisis.

BARNEY FRANK, CHAIRMAN OF HOUSE FINANCIAL SERVICES COMMITTEE

Representative Barney Frank is an oddity among the well-dressed, conservative banking lobbyists who carefully parse their sentences as they come before his powerful committee.

It's not just because of his rumpled clothes, his short temper, or his sharp tongue. A lawyer and feared debater, Frank is an unabashed advocate for activist government and has more intellectual heft in his field than any other member of Congress. The Massachusetts Democrat is a power player on Capitol Hill. He often appears side-by-side with leaders to field nitty-gritty financial policy questions from the press.

He has long argued the mortgage crisis, the credit crunch and the recession show the danger of taking a hands-off approach to the economy and Wall Street. With Obama and the Democrats in power, a more hands-on approach has arrived.

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*FACTBOX-Obama plan for financial reforms [ID:nN15211435]

*Obama wants big banks to hold more capital[ID:nN15190553]

(Reporting by Kevin Drawbaugh, Glenn Somerville, Alister Bull, David Lawder, Christopher Doering, Karey Wutkowski, Rachelle Younglai, John Poirier and Diane Bartz; Editing by Steve Orlofsky and Dan Grebler)

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