The administration faces a tough task following its proposal for sweeping regulatory reform. In the first of what will undoubtedly become a series of hearings, Treasury Department secretary Tim Geithner testified today before a US Senate banking committee, pleading the case for passage of the legislation and defending specific initiatives within the brief 85-page "white sheet" on the reform. "The critical test of our reforms will be whether we make this system strong enough to withstand the stress of future recessions and the failure of large institutions," he said, according to prepared remarks. "That's our basic objective; we want to make it safe for failure." Geithner backed one of the most significant proposals, the consolidation of consumer protection powers from multiple existing agencies into one Consumer Financial Protection Agency that will look out for the interests of consumers in regards to what financial products are sold and how they are sold. He said the formation of this agency will ensure transparency, fairness financial soundness of loan and credit producst sold to consumers, not only for their own good but for the good of the whole system. Geithner also defended a proposal within the plan that has already seen criticism among industry players. He said the Federal Reserve is best equipped to play an emergency response role in financial crises seen among the largest, most complex and interconnected institutions and therefore must be allowed the broader authority posed in the plan. Increased authority for the Fed is already a key point of contention and will likely see more discussion as the Senate banking hearing unfolds. But strengthening the Fed should be done cautiously, according to John Taylor, president and CEO of the National Community Reinvestment Coalition (NCRC), a consumer group devoted to the creation of affordable housing and promotion of access to banking services for working US families. "The regulatory failure of the Federal Reserve was the most significant of all the agencies," Taylor said in a statement. "[The Fed] had the power to regulate unfair and deceptive practices, and with that power wipe away much of the reckless and irresponsible lending that led to the subprime crisis, but they chose not to do so for years." "Countless warning from consumer advocates over a period of years fell on deaf ears," Taylor added. "The agency often acted as if their primary duty was to the banks, not to the taxpayer." But another proposal within the plan, increased regulation of mortgage products, does look out for the taxpayer and the everyday homeowner, according to other groups. An industry group, the Mortgage Bankers Association, issued a statement supporting the reform proposal and the mortgage banking regulation. MBA chairman David Kittle called the proposal a "launching point" for discussion of a much-needed regulator for non-depository independent mortgage banks and mortgage brokers. "[A]ll participants in the mortgage origination process should have a financial interest in making sure a borrower has a sustainable mortgage payment, without putting certain business models at a competitive disadvantage,” Kittle said. Write to Diana Golobay.