US President Barack Obama proposed a major overhaul of the US financial system on Wednesday, unveiling measures he hopes will restore confidence and prevent a repeat of the worst crisis to hit Wall Street in seven decades.

U.S. President Barack Obama waves goodbye after making remarks on financial regulations in the East Room of the White House in Washington June 17, 2009. [Larry Downing/CCTV/REUTERS]

The Obama plan would give new powers to the Federal Reserve to oversee the entire financial system.

The US administration also decided to create a new consumer protection agency, to guard against the types of abuses that played a big role in the current crisis.

Barack Obama, US President, said, "I am proposing that the Federal Reserve be granted new authority and accountability for regulating bank holding companies and other large firms that pose a risk to the entire economy in the event of failure. "

The changes will spark intense debate in Congress, with opponents charging that too many restrictions may harm the ability of US companies to compete in the global economy.

Other interest groups fear the changes will cut into profits or impose undue complexities on their industries.

Robert Brusca, Chief Economist, FAO Economics, said, "I think the President has made a reasonable shot at it. We'll have to see how these things are implemented, for the time being you know we are reading these statements of intent and, as my mother always used to say, the road to hell is paved with good intentions - so we'll have to wait and see where this road is going."

Obama's plan to build a consumer agency is in response to criticism that mortgage lenders and credit card companies had taken advantage of unsuspecting customers and saddled them with too much debt.

The new regulator would have the power to demand that customers have the option of simple financial products, to impose fines and to allow states to pass laws that are stricter than the federal standards.

(CCTV June 18, 2009)