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AP – Senate Banking Committee Chairman Christopher Dodd, D-Conn., left, speaks on Capitol Hill in Washington, …
By ANNE FLAHERTY and JIM KUHNHENN, Associated Press Writer Anne Flaherty And Jim Kuhnhenn, Associated Press Writer – 27 mins ago
WASHINGTON – President Barack Obama’s plan to increase oversight of banks and other financial institutions ran into skepticism Thursday on Capitol Hill where senators sharply questioned whether it was enough to prevent another economic meltdown. The lack of a ringing endorsement suggests the proposal was headed for a rewrite by a Congress sensitive to voter frustration with the government’s handling of the economy.
“They’re very angry, and they are worried. And they are wondering who’s looking out for them,” Sen. Christopher Dodd, chairman of the Senate Banking Committee, said of his constituents.
In testimony before the panel, Treasury Secretary Timothy Geithner defended the proposal as the nation’s best shot.
“It will be very hard, perhaps impossible, for any authority, any individual to anticipate and pre-empt all potential sources of future risk,” Geithner said.
Lawmakers mostly agreed that change was needed to streamline federal regulation and fill in oversight gaps believed to have contributed to the housing and credit crisis. Several Democrats also lauded the proposed creation of a new consumer-protection agency that would police the market for deceptive business practices in such financial products as credit cards and mortgages.
But members on both sides of the aisle questioned whether the administration was putting too much faith in the Federal Reserve.
Under Obama’s plan, the Fed would oversee institutions deemed so big or influential in the market that their failure could seriously damage the economy.
A council of federal regulators, including the Fed, would help monitor the market for risk. But the Fed would ultimately be accountable for ensuring companies don’t make overly risky bets.
Several lawmakers have suggested tasking the council of regulators with the job and criticized the Fed for its role in the recent crisis.
“The reality is they (the Fed) had the knowledge and authority to address the mortgage problem long before it became a crisis, and they didn’t act,” said Sen. Robert Menendez, D-N.J.
Other lawmakers questioned whether the Fed could become an effective super-regulator while retaining its role as the nation’s central bank and setting monetary policy.
“I do not believe that we can reasonably expect the Fed or any other agency to effectively play so many roles,” said Sen. Richard Shelby of Alabama, the top Republican on the Senate panel.
Geithner said the Fed was the best option because it was the only institution with the capacity and expertise to monitor the “too big to fail” firms. Giving the power to the council of regulators could delay action in a crisis, he added.
“You cannot convene a committee to put out a fire,” he said.
Geithner also noted that the plan would strip the Fed of its role in overseeing consumer protections in setting up an agency focused solely on the mission.
However, it is likely that the Fed will mount a defense to keep its consumer oversight duties. Fed officials believe their oversight of mortgages, credit cards and other products fits well with their duties to regulate banks, and that they have the right mix of experts — economists and lawyers — already on hand to do the job.
At the White House, Obama spokesman Robert Gibbs said the administration would watch what Congress does with the proposal, but added, “the president feels enormously comfortable with his proposal.”
Commenting on criticism from the financial sector aimed at the consumer protection agency and other aspects of the plan, Gibbs said: “The president intends to fight for each and every one of those.”
Other details of the plan were also scrutinized. Democratic Sens. Charles Schumer of New York and Jon Tester of Montana pressed Geithner on why the administration did not seek greater consolidation of regulatory agencies.
“A multiplicity of regulators tends to produce less oversight overall,” Schumer said.
Geithner conceded the regulatory system is not ideal. But, he said, it would have been a politically difficult task.
“We did not want to put you in a position of having to spend a lot of time on changes that may be desirable, that may leave us with a neater system, maybe a more efficient system, but were not central to the cause of the problem,” he said.
Democratic leaders have committed to pushing through reform legislation by the end of the year.
The ambitious timetable — Dodd is simultaneously trying to shepherd an overhaul of the nation’s health care system — has some members worried about missteps. Others lawmakers say Congress has no choice but to act quickly so as to prevent another crisis.
“If we mess this up, the unintended consequences for not only our economic recovery but the overall long-term financial stability for the world is really at stake,” said Sen. Mark Warner, D-Va.
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Associated Press Writer Jeannine Aversa contributed to this report.

President Barack Obama returns to the White House following a trip to Normandy for a D-Day commemoration …
 
 
By BRETT BLACKLEDGE, Associated Press Writer Brett Blackledge, Associated Press Writer – 30 mins ago
WASHINGTON – Eager to show action on the ailing economy, President Barack Obama promised Monday to speed federal money into hundreds of public works projects this summer, vowing that 600,000 jobs will be created or saved.
Surrounded by his Cabinet, Obama emphasized what has become a dominant issue of public concern — an economy that keeps bleeding jobs — on the day after returning from a week of diplomacy and sightseeing in the Middle East and Europe.
He concentrated in his remarks on the billions of dollars from a taxpayer-funded plan that will be disbursed this summer, although much what he was described was already in the works, spurring new debate about just how much the $787 billion stimulus plan is helping.
“We’ve done more than ever, faster than ever, more responsibility than ever, to get the gears of the economy moving again,” Obama said. Based on the work done across a broad spectrum of federal agencies during the first 100 days of the administration, the president said, “we’re in a position to really accelerate.”
But at the same time, he said he wasn’t happy with the progress made so far and pressed his Cabinet to keep at it.
He said he was pleased the economy lost fewer jobs in May than experts anticipated, saying that was a sign things were moving in the right direction. But Obama also cautioned bluntly that “we’re still in the middle of a very deep recession” and said “it’s going to take a considerable amount of time for us to pull out.”
The jobs initiative under the stimulus law covers an array of public works ranging from parks and wastewater projects to improvements at military facilities, airports and veteran medical centers.
The ramp-up is not surprising; the administration had always viewed the summer as a peak for stimulus spending, as better weather permits more public works construction and federal agencies had processed requests.
Republicans remain critical of the stimulus spending, slamming it as a big government program that ultimately will do little for recovery.
Said Obama: “Our ultimate goal is making sure that the average family out there, mom working, dad working — that they are able to pay their bills, feel some job security, make their mortgage payments.”
The sheer enormity of the spending plan and its long-term costs to the public have raised concern for many Americans and given Republicans a foothold.
A recent Associated Press-GfK poll found that 41 percent of those surveyed disapproved of Obama’s handling of the deficit, his highest disapproval rating on any subject polled. Other surveys show that the public is particularly attuned to government spending and the amount of red ink in the budget.
Without naming names, Obama shot back at skeptics during the Cabinet meeting.
“I know that they are some who, despite all evidence to the contrary, still don’t believe in the necessity and promise of this recovery,” Obama said. “And I would suggest to them that they talk to the companies who, because of this plan, scrapped the idea of laying off employees and in fact decided to hire employees. Tell that to the Americans who received that unexpected call saying, `Come back to work.’”
The White House announced a Web site, http://www.whitehouse.gov/recovery, to allow people to share stories and videos of projects in their towns.
Just how much of an impact Obama’s recovery program had on the pace of job losses is up for debate.
Obama has claimed as many as 150,000 jobs saved or created by his stimulus plan so far, even as government reports have shown the economy has lost more than 1.6 million jobs since Congress approved funding for the program in February.
Obama initially offered his stimulus plan as a way to put people back to work, a promise that 3.5 million jobs would be saved or created. The administration’s predictions that unemployment would rise no higher than 8 percent already have been shattered.
Federal agencies will release billions of stimulus dollars to states in the coming months.
Health and Human Services will provide funding for 1,129 health centers to provide expanded service for 300,000 patients; Interior will begin improvements on 107 national parks; Veterans Affairs will start work on 90 medical centers in 38 states; the Justice Department will fund 5,000 law enforcement jobs; the Agriculture Department will begin 200 new rural waste and water system projects; and the Environmental Protection Agency will begin or accelerate the cleanup of 20 Superfund sites.
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Associated Press writers Philip Elliott and Ben Feller contributed to this story.