THE US financial system is headed for a groundbreaking period of reform, after President Obama unveiled his vision of a regulatory regime designed to avert new financial crises.<br /><br />Outlining a raft of measures he termed a &ldquo;transformation on a scale not seen since the reforms that followed the Great Depression&rdquo;, Obama blamed a &ldquo;culture of irresponsibility&rdquo; for the financial crisis.<br /><br />In a bid to promote more intrusive oversight of financial institutions the Federal Reserve, chaired by Ben Bernanke, will take on responsibility for the regulation of firms that could pose a systemic risk to economic stability.<br /><br />He also said lenders will be required to maintain higher capital cushions during good economic times, in preparation for unforeseen crises in the global economy.<br /><br />A new Financial Services Oversight Council (FSOC), staffed by the heads of regulatory bodies, will play a role in singling out systematically important firms that should be regulated by the Fed. But the Office of Thrift Supervision &ndash; widely blamed for the near collapse of insurer AIG &ndash; and the Office of the Comptroller of the Currency will be axed, to be replaced by a single National Bank Supervisor.<br /><br />Hedge funds will face greater scrutiny &ndash; including the requirement to register with the Securities and Exchange Commission (SEC) &ndash; while securities originators will be subject to compensation restrictions.<br /><br />Obama also addressed fair lending, announcing a Consumer Financial Protection Agency (CFPA) to ensure that there is no repeat of the sub-prime lending blamed for triggering the credit crisis.<br /><br />The US Chamber of Commerce gave elements of the plan a cautious welcome but said it merely made a complex system more layered, &ldquo;without addressing the underlying and fundamental problems&rdquo;. But Obama argued that opposition was driven by &ldquo;special interests&rdquo; and vowed that his reforms would see a return to &ldquo;hard work and responsibility, not recklessness and greed&rdquo;.