Obama to speak in Manhattan about financial rules

President Barack Obama plans to press his case for overhauling U.S. financial regulations in a speech this week in Manhattan as the administration tries to break Republican opposition to the legislation.

The remarks on Thursday at Cooper Union will come as the Senate is scheduled to take up a measure that would set up a mechanism for unwinding systemically important financial firms when they fail, create a consumer protection bureau at the Federal Reserve and bolster oversight of hedge funds and the $605 trillion over-the-counter derivatives market.

"The American people want us not to play politics with this important issue, but, instead, to get something done," White House press secretary Robert Gibbs said yesterday. The administration ultimately expects "a strong bipartisan vote" in favor of an overhaul, he said.

The debate on it is heating up against the backdrop of a civil suit filed by the Securities and Exchange Commission that targeted Goldman Sachs Group Inc., alleging the bank created and sold collateralized debt obligations linked to subprime mortgages in early 2007 without disclosing that hedge fund Paulson & Co. helped pick the underlying securities and bet against the vehicles.

Treasury Secretary Timothy F. Geithner met with Maine Republican Sen. Susan Collins yesterday in the effort to gain broader support. Collins said Geithner told her the administration isn't supporting creation of a $50-billion fund called for by the bill that would pay for dissolving failing firms that pose a risk to the financial system.

All 41 Senate Republicans signed a letter last week pledging their opposition to the proposed legislation; the fund was one of the chief points of criticism. Democrats will need the backing of at least one Republican to bring the legislation to a Senate vote.

"The secretary told me that he agreed with my concerns and that, in fact, the administration does not support the creation of a $50-billion fund," Collins said after her meeting with Geithner.

Led by Senate Minority Leader Mitch McConnell of Kentucky, Republicans in attacking the provision have said the fund would perpetuate taxpayer-funded bailouts. Democrats argue the process would be used to euthanize, not prop up, failing firms.