Congress meets with banking industry

TEXT OF STORY

Bill Radke: Meanwhile, Congress is holding at least half a dozen hearings this week on the U.S. banking industry. Steve Henn reports that members would rather be back home campaigning, but they also want to come up with a plan for after the election.

Steve Henn: Arthur Levitt, the former chairman of the SEC, is pretty blunt when discussing what led up to the current mess:

Arthur Levitt: Our regulatory system failed to adapt to important, dynamic, and potentially lethal new financial instruments.

Levitt told the Senate Banking Committee last week the system is now broken:

Levitt: We need a dramatic rethinking of our financial regulatory architecture — the biggest since The New Deal.

Mike Calhoun is president of the Center for Responsible Lending. He says job one is plugging the gaps in oversight.

Mike Calhoun: Many of the worst subprime loans were sold by firms that operated under state charters and had very little supervision.

The industry knows more oversight is coming, especially in entirely unregulated areas like the multitrillion-dollar market in credit default swaps.

In Washington, I’m Steve Henn for Marketplace.