Democratic presidential hopeful Barack Obama told CNBC that financial regulations need to be revamped in order to deal with the credit crisis and threat of recession.
AP
Barack Obama
“It’s going to start with dealing with the immediate crisis, both in the financial markets and in the housing market,” he said in an interview with Maria Bartiromo.
“On the housing market, to prevent foreclosures, I think it is important for us to create some bottom, some floor, give people some sense of where does this end, and so I am a strong proponent of the proposal that Chris Dodd and Barney Frank have put forward, having the FHA step in to help stabilize the market.”
Obama says he doesn’t consider this is a bailout for borrowers or lenders, but a way to rework loan packages so that they're affordable.
Next on his list is stabilizing the financial markets, which he hopes to do in part by adding new regulatory structures.
“If the Fed is going to be a lender of last resort to investment banks, then it is, I think, legitimate to make sure that those banks are subject to some sort of requirements, both in terms of liquidity and capital, to assure that we're not seeing excessive risks taken so that they get all the upside and the Fed gets all the downside.”
Obama said it is also important to understand that the economy has been out of balance for quite some time, so he proposes creating a tax code that is more equitable and making sure that we're making investments in things like infrastructure and clean energy that can put us on a more stable long-term competitive footing.
“We had high corporate profits, enormous rises in productivity over the last decade but wages and incomes have flat-lined, and so you had a lot of concentrated wealth at the top, but ordinary folks were getting hammered with rising gas prices, rising costs of health care, rising costs of college tuition.”
When asked if he was a liberal, Obama emphasized his belief in the market.
“I believe in entrepreneurship, I believe in opportunity, I believe in capitalism and I want to do what works, but what I want to make sure of is it works for all America and not just a small sliver of America.”
Obama's interview echoed many of the themes he offered earlier Thursday during a speech in New York, when he proposed a $30 billion economic stimulus plan to help homeowners.
Obama said an era of financial deregulation has created conditions that led to the housing and credit crisis that has pushed the U.S. economy to the brink of a recession.
"It is time for the federal government to revamp the regulatory framework dealing with our financial markets," the Illinois senator said in a wide-ranging speech on the economy.
"Our capital markets have helped us build the strongest economy in the world," Obama said. "They are a source of competitive advantage for our country. But they cannot succeed without the public's trust."
Obama, who would be the first black U.S. president, and New York Sen. Hillary Clinton are in a heated battle for the Democratic nomination to face likely Republican nominee John McCain in the November presidential election.
He proposed a $30 billion stimulus plan that would provide relief to areas hardest hit by the housing crisis, and an extension of unemployment insurance for those out of work.
"If we can extend a hand to banks on Wall Street when they get into trouble, we can extend a hand to Americans who are struggling through no fault of their own," Obama said to applause.
Clinton, who would be the first woman president, called last week for a $30 billion emergency housing fund to help ease the housing crisis. An estimated 4 million American homeowners are in danger of losing their houses.
A two-year, $168 billion stimulus aimed at propping up the U.S. economy is about to take effect, with $152 billion to be doled out this year.
Arizona Sen. McCain in a statement reiterated that he wanted reforms aimed at "improving transparency and accountability in our capital markets -- both of which were lacking in the lead-up to the current situation."
"However, what is not necessary is a multibillion dollar bailout for big banks and speculators, as Sen. Clinton and Obama have proposed. There is a tendency for liberals to seek big government programs that sock it to American taxpayers while failing to solve the very real problems we face," he said.
Traveling in North Carolina, Clinton proposed a $12.5 billion package to provide job training for displaced workers. The package would include $2 billion a year over five years to create universally available job retraining services for the unemployed and $500 million a year for on-the-job training and worker education.
--Reuters contributed to this report