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Obama Asks Wall Street for Reform Support as Senate Battle Looms

April 22, 2010 at 12:00 AM EST
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President Obama admonished Wall Street for fighting financial reforms as the Senate prepares to consider new regulations for the country's financial system. Judy Woodruff reports on reactions in the financial community.
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JUDY WOODRUFF: The president’s message today was part rebuke, part appeal for help to prevent another financial meltdown. He made it in New York City to leaders of the financial community, as a showdown looms in the U.S. Senate.

Mr. Obama chose Cooper Union College as his venue just a short ride from Wall Street. The speech was sharply worded, taking the financial sector to task for the meltdown of 2008.

U.S. PRESIDENT BARACK OBAMA: A free market was never meant to be a free license to take whatever you can get, however you can get it. That’s what happened too often in the years leading up to the crisis.

Some — and let me be clear, not all, but some — on Wall Street forgot that behind every dollar traded or leveraged, there’s family looking to buy a house, or pay for an education, open a business, save for retirement. What happens on Wall Street has real consequences across the country — across our economy.

JUDY WOODRUFF: The president then made his case for what he called updated commonsense regulations, as envisioned in the Senate Democrats’ bill.

They include limits on the risks that banks take, reforms for executive compensation, new transparency rules for derivatives and other complicated financial instruments, and a new consumer protection agency.

The plan also creates a fund with money collected from banks to help dismantle large institutions on the brink of collapse. The president insisted it would put a stop to federal bailouts.

BARACK OBAMA: The goal is to make certain that taxpayers are never again on the hook because a firm is deemed too big to fail.

JUDY WOODRUFF: But Mr. Obama charged that industry lobbyists are engaged in furious efforts to thwart the legislation.

BARACK OBAMA: I’m sure that some of these lobbyists worked for you, and they’re doing what they are being paid to do. But I’m here today specifically, when I speak to the titans of industry here, because I want to urge you to join us, instead of fighting us in this effort.

JUDY WOODRUFF: Sitting in the audience were major players, including Lloyd Blankfein, chief of Goldman Sachs. Last week, the U.S. Securities and Exchange Commission accused the investment bank of defrauding investors.

The president’s other audience was back in Washington, where efforts continued to fashion a Senate compromise.

WOMAN: The Republican leader.

JUDY WOODRUFF: But, shortly before the president spoke, Senate Republican Leader Mitch McConnell said the public still has hard questions about bailouts and other issues.

SEN. MITCH MCCONNELL, R-Ky., minority leader: So, it should come as no surprise to anyone that, when we’re talking about a giant regulatory reform bill, the American people aren’t all that inclined to take our word for it when we say it doesn’t allow for bailouts, or that it won’t kill jobs, or that it won’t enable the administration to pick winners or losers. They have heard all that before, and they have been burned. This time, they want us to prove it.

JUDY WOODRUFF: Senate Democrats moved today to limit debate on the bill and aim for final action next week. A crucial test vote is set for Monday afternoon. A separate financial reform bill has already passed the House.