Washington — President Barack Obama hoped to head off a new economic meltdown with his sweeping financial “rules of the road” on Wednesday. But even his own top economic adviser conceded that no plan — and no president — can look around the curve to avoid the next crisis.

Administration officials say their proposal responds to the current crisis— in national security terms, it prepares them to fight the last war. But they also insist that a central tenet of their plan is a requirement that from now on, financial institutions will have to be better capitalized, the best hedge against another financial collapse.

“I’m not sure that anybody can forecast crises with precision,” Lawrence Summers, director of Obama’s National Economic Council, told The Associated Press. “That’s why it’s going to be critical to raise capital levels for all institutions.”

Aimed at preventing a repeat of the worst economic crisis in seven decades, the changes would reverse a determined campaign begun in the 1980s by President Ronald Reagan to cut back on federal regulations.

Obama’s plan, spelled out in an 88-page white paper, would do little to streamline the alphabet soup of agencies that oversee the financial sector. But it calls for fundamental shifts in authority that would eliminate one regulatory agency, create another and both enhance and undercut the authority of the powerful Federal Reserve.

The new agency, a consumer protection office, would specifically take over oversight of mortgages, requiring that lenders give customers the option of “plain vanilla” plans with straightforward and affordable terms. Lenders who repackage loans and sell them to investors as securities would be required to retain 5 percent of the credit risk — a figure some analysts believe is too low.

It also would make the Fed the regulator of some of the largest and most interconnected institutions in the financial world — an attempt to supervise companies that are so big that if they fail they could do harm to the economy. A separate council, chaired by the Treasury secretary, would watch over the financial system to flag risky new products or trends.

In all, the Obama’s broad proposal cheered consumer advocates and dismayed the banking industry with its proposed creation of a regulator to protect consumers in all their banking transactions, from mortgages to credit cards. Large insurers protested the administration’s decision not to impose a standard, federal regulation on the insurance industry, leaving it to the separate states as at present. Mutual funds succeeded in staying under the jurisdiction of the Securities and Exchange Commission instead of the new consumer protection agency.

Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. We strive to uphold our values for every story published.