Obama tells Wall Street to get behind regulatory reform
President Barack Obama warned financial firms on Monday to heed the lessons of Lehman Brothers’ collapse a year ago and get behind a regulatory overhaul he wants Congress to pass this year.
Obama, who has focused most of his energy on healthcare reform in recent weeks, went to Wall Street to highlight another top priority of his administration — updating financial rules to prevent another economic collapse.
While the economy and the financial system are showing signs of recovery, Obama said that was not an excuse to avoid reform.
“Normalcy cannot lead to complacency,” he said at Federal Hall in the heart of Wall Street.
“Unfortunately, there are some in the financial industry who are misreading this moment. Instead of learning the lessons of Lehman and the crisis from which we’re still recovering, they’re choosing to ignore those lessons.”
Lehman, once the fourth-largest U.S. investment bank, filed for bankruptcy on September 15, 2008, triggering a global financial crisis that also helped propel Obama to the presidency as Americans welcomed his cool response to the problem.
SLOW PROGRESS ON GLOBAL ISSUE
Financial reform will be a key issue at a G20 summit of leading developed and developing nations in Pittsburgh next week but progress on Obama’s agenda has been slow.
Obama’s speech also sought to show other countries his administration is serious about tackling weaknesses and excesses in the U.S. financial system that are blamed for setting off the global crisis.
“As the United States is aggressively reforming our regulatory system, we’re going to be working to ensure that the rest of the world does the same,” he said.
Under a proposal put forward in June, the Federal Reserve would get new powers to monitor big financial firms and a new Consumer Financial Protection Agency would be created.
Obama emphasized the CFPA as he outlined his proposals, indicating it has become a top priority.
“This crisis was not just the result of decisions made by the mightiest of financial firms. It was also the result of decisions made by ordinary Americans to open credit cards and take on mortgages,” he said, adding that some lenders were deceitful even as some people took on loans they could not afford.
“This is in part because there is no single agency charged with making sure that doesn’t happen. That’s what we intend to change.”
Barney Frank, a lawmaker at the center of efforts to overhaul U.S. financial rules, said the Obama administration may have to compromise on its proposal to put the Fed in charge of monitoring “systemic risk” posed by Wall Street firms.
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