Obama to Sweep Street, Not Repave It

It was clear that broader oversight of the financial industry was on the horizon, even before the winner of Tuesday's U.S. presidential election was known.

But after Democrat Barack Obama's landslide victory over Arizona Republican John McCain, the Illinois senator's plan to streamline the financial regulatory system and tighten the reigns of control will soon begin to take shape. And now that his party has gained stronger majorities in both houses of Congress, there won't be much standing in his way.

"There's likely to be greater regulation," says Richard Clemens, a fellow at the Center on Federal Financial Institutions, a nonpartisan public policy institute. "And that could have happened regardless of who won the election, but I think because Obama won and because the Democratic majority were strengthened, it's likely to be more regulation than if the Republicans had won."

Still, Clemens, who represented financial firms in regulatory cases as a senior partner at Sidley Austin, is quick to note he does not "think it will go to extremes."

Obama seems to be planning what he often refers to as a "common-sense" approach to modernizing the regulatory system and cracking down on agents of malfeasance that fueled the current crisis. Some elements of his plan are sure to give pause to industry insiders who fear that Obama and his Democratic colleagues will pull the regulatory reigns in too tight. Those include compensation caps, less favorable tax laws for corporations and the wealthy, and greater scrutiny of practices and assets that had largely been unregulated.