A proposal for a complete regulatory overhaul is expected to be revealed this Wednesday and the Obama administration is expecting stiff resistance to certain aspects of the proposal from banking companies. Almost all areas related to banking operations will be touched by the proposed legislation; ranging from how consumers are charged on credit card debts to how exotic financial instruments are packaged.

The outcome of Obama’s proposed financial reorganization will have a large impact on how banks operate in the future. Varying interest on different segments of the economy, from business to consumers to the government needs to be ironed out. Talks about regulatory problems will likely dominate the discussions in Capitol Hill for the succeeding months.

At the center of the regulatory plan is the “white paper” as it is referred to by the administration. In essence, it aims to provide the Federal Reserve more oversight power when it comes to dealing with the largest players. The government wants the Fed to gain the authority to break-up important companies – similar to how FDIC operates failed banks – once it becomes a threat to the overall economy. In addition, the Obama administration also wants to create a new watchdog that will scrutinize consumer products more thoroughly.

Certain lawmakers want to consolidate power to a single regulatory agency but the president does not intend to pursue this route. Instead, the administration will allow several agencies to continue their operations. In fact, the only agency that will be abolished is the Office of Thrift Supervision. If the proposed consumer agency pushes through, the number of oversight institutions in the financial industry will remain the same.

Treasury Secretary Timothy Geithner is scheduled to appear before the Senate and House panels. Many expect him to be criticized and called to answer how regulators can create a process that will not simply bailout finance companies on the brink of collapse. Lawmakers also want more responsibility on the part of the banks. The issue of giving more authority to the Federal Reserve will also be a thorny issue given its past failures and culture of secrecy.

• Federal Reserve Bank’s Additional Powers – Weekly Round-Up
• Fed Tasked to Oversee Systematic Risks in the Financial Industry
• Oversight Structure will become Sticker for Banks
• Mounting Opposition to Obama’s Consumer Finance Regulator
• Financial Overhaul: Will It Solve the Problems?
• Financial Overhaul Weakens as the Economic Shock Fades
• Bond Issue Considered by IMF: Will This Help Improve Lending Programs?
• U.S. Unemployment – Stemming Job Losses without Second Stimulus
• Bernanke set to be nominated for 2nd Term as Fed Chief
• The New Reality About Consumer Spending Habits