Obama focuses on next step

President Barack Obama, speaking a year after Lehman Brothers' collapse, plans to outline his plan to wind down government involvement in the financial sector and lay out a case for immediate action on overhauling the industry's regulations.

At Federal Hall in New York City, Obama is this morning expected to urge the financial community to support new financial rules and avoid a return to practices of the past that led to the financial crisis, and emphasise the need for global co-ordination on financial oversight, says an administration official.

Obama's speech "will focus on the need to take the next series of steps on financial regulatory reform", White House press secretary Robert Gibbs said.

The President wants to put in place "sufficient safeguards to ensure that doesn't happen again and cause the type of havoc that we've seen on our economy".

Obama isn't expected to offer new initiatives, he said.

Lehman's filing for bankruptcy on September 15 last year helped trigger a global financial crisis that led to more than US$1.6 trillion in losses and write downs by financial institutions and unprecedented government interventions in banking, insurance and vehicle industries.

In response to the financial crisis, the Obama Administration proposed on June 17 changes to US financial regulations, including oversight of the systemic risk large financial institutions pose to the economy, new ways for the Government to dismantle failed companies and a regulator to oversee financial products for consumers.

During his speech, Obama will recount steps taken by the administration in response to the financial crisis and discuss steps the Government is taking to reduce it's involvement in the financial sector, the administration official said.

With the unemployment rate poised to hit at least 10 per cent this year, Obama has vowed the administration would keep up pressure on Wall St to free up more credit for businesses and consumers and on Congress to write new financial rules.

The issue will be at the forefront when Obama plays host to a meeting of leaders from the Group of 20 nations this weekend in Pittsburgh.

G20 finance ministers and central bankers this month agreed on a blueprint for changes to financial services regulations, including global standards on pay. Those include a global pay code that include forcing banks to "claw back" cash awards if earnings falter and more closely tying compensation to long-term performance.

Detailed proposals scheduled to be presented in Pittsburgh will suggest how banks can be forced to "prevent excessive short-term risk taking".

- BLOOMBERG