Obama seeks greater rein on financial institutions

(AP) - President Barack Obama said Wednesday he wants legislation providing greater regulation of financial institutions like American International Group so taxpayers won't be left "holding the bag" when companies fail.

Standing on the White House lawn as he prepared to go to California, Obama again called AIG's executive bonuses "outrageous." But he said the problem goes deeper than that.

"Just as outrageous is the culture that these bonuses are a symptom of, that has existed for far too long: excess greed, excess compensation, excess risk-taking," he said.

"As we work toward getting ourselves out of the recession, I hope that Wall Street and the marketplace doesn't think that we can return to business as usual," he said.

"The buck stops with me," Obama told reporters.

He revealed that he and members of his White House Economic Council have begun discussions with leading congressional players, including Rep. Barney Frank, D-Mass., on the possibility of legislation that would create a new regulatory entity along the lines of the Federal Deposit Insurance Corporation, to give the government more authority over financial institutions like AIG.

Obama also said he has "complete confidence" in Treasury Secretary Timothy Geithner, whose handling of the situation with AIG has come under harsh criticism in Congress.

Obama said that Geithner has been "making all the right moves in playing a bad hand."

He said he wants legislation from Capitol Hill that would set up an authority that would be similar but not identical to "the power that FDIC currently has over banks," which allows it to protect creditors, depositiors and consumers.

Obama said such legislation is vitally needed to ensure that "we're not going to find ourselves in these kinds of terrible positions."

(Copyright 2009 by The Associated Press. All Rights Reserved.)

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