Obama wants to create new financial regulatory authority

WASHINGTON: US President Barack Obama on Wednesday called for a new regulatory authority for financial firms to avoid damaging fallout like that from the government bailout of American International Group.

"What we are working on is a resolution authority that would be similar - not identical - but similar to the powers that the FDIC currently has over banks," the president told reporters.

Obama said he had spoken with his economic team and Representative Barney Frank of the House financial services committee about "the importance of giving ourselves tools to prevent ourselves from getting in a situation where an AIG can pose such enormous vulnerabilities to the system as a whole."

The Obama administration is under growing fire after AIG paid 165 million dollars in retention bonuses to employees of the government-rescued insurance giant, which has received more than 170 billion dollars in taxpayer money in recent months.

The proposed regulatory entity would have similar authorities to the Federal Deposit Insurance Corporation, which regulates banks and guarantees deposits, but would cover other types of financial institutions.

Obama said his economic team would be consulting with Congress on legislation to create the "proactive" entity that would "make sure that we are separating out bad assets from good, dealing with contracts that may be inappropriate, and preventing the kinds of systemic risks that we've seen taking place with AIG."

"We're going to be moving that on a fast track," he added.

Obama said such legislation is part of a broader package of financial regulatory steps his administration would be taking to prevent "these kinds of terrible" situations from happening again.