Financial institutions that pose a serious risk to markets should be subject to serious government oversight, President Barack Obama said Wednesday.
Speaking after meeting with Treasury Secretary Tim Geithner and lawmakers on financial regulatory reform, Obama also said: "But let me be clear—the choice we face is not between an oppressive government-run economy and a chaotic and unforgiving capitalism.
"Rather, strong financial markets require clear rules of the road, not to hinder financial institutions, but to protect consumers and investors."
The president offered no specific regulatory framework, but called for "core principles." Among them are consumer protections, accountability for executives and a regulatory plan that covers a broad series of financial transactions that have escaped regulation in the past.
Obama met Wednesday with Treasury Secretary Timothy Geithner and with the chairmen and ranking Republicans of the House and Senate committees that would be charged with drafting the regulations.
Obama said, "Rather, strong financial markets require clear rules of the road, not to hinder financial institutions, but to protect consumers and investors."
An administration official said Obama wants Congress to work on the regulatory overhaul in the next several weeks, before April's meeting of the world's 20 major economies.
"We must recognize that the challenges we face are not just American challenges, they are global challenges," Obama said.
"So as we work to set high regulatory standards here in the U.S., we must challenge the world to do the same." Among those attending Wednesday's meeting at the White House was House Financial Services Committee Chairman Barney Frank.
The Massachusetts Democrat has already begun working on legislation that would establish a regulator to oversee the kind of systemic risks that led to the market free fall last year.
Frank has proposed that the task be placed in the hands of the Federal Reserve.
And Senator Christopher Dodd, chairman of the U.S. Senate Banking Committee, pledged that Congress would work with President Barack Obama to craft comprehensive reform of financial sector regulations.
"Our intention is to work with the administration to try to put together a comprehensive, thoughtful modernization of our financial regulations that will give the country the confidence and the optimism that our financial services sector is going to be strong and vibrant and healthy," the Democratic lawmaker said.
"Our intention is to try to get this done in the coming weeks and months," Dodd told reporters after the White House meeting. Dodd has been cooler to the idea of placing that oversight with the Fed.
Obama's call for overhauling financial sector regulation is ballast to his call for continued government action to shore up the ailing industry.
Members of Congress, echoing public sentiment, have been wary of how the government is spending $700 billion designed to loosen credit by infusing capital into banks.
In his address to a joint session of Congress Monday, Obama made it clear that he was aware of the sentiment and cast the banking bailout as a needed remedy to help families and small businesses.
"This plan will require significant resources from the federal government—and, yes, probably more than we've already set aside," he said Tuesday.
He then added: "I will not spend a single penny for the purpose of rewarding a single Wall Street executive, but I will do whatever it takes to help the small business that can't pay its workers, or the family that has saved and still can't get a mortgage."