JUDY WOODRUFF: President Obama warned the financial industry today not to bring on another meltdown. He spoke on the anniversary of the Lehman Brothers collapse that triggered a crisis.
NewsHour’s Kwame Holman has our lead story report.
KWAME HOLMAN: Today in the Wall Street district, the president said the panic is passed, thanks to federal rescue and stimulus efforts.
U.S. PRESIDENT BARACK OBAMA: We can be confident that the storms of the past two years are beginning to break. The growing stability resulting from these interventions means we’re beginning to return to normalcy. But here’s what I want to emphasize today: Normalcy cannot lead to complacency.
KWAME HOLMAN: To that end, Mr. Obama warned that some in the industry are ignoring the lessons of the Lehman collapse.
BARACK OBAMA: We will not go back to the days of reckless behavior and unchecked excess that was at the heart of this crisis, where too many were motivated only by the appetite for quick kills and bloated bonuses. Those on Wall Street cannot resume taking risks without regard for consequences and expect that next time American taxpayers will be there to break their fall.
KWAME HOLMAN: Lehman’s failure was the largest bankruptcy in U.S. history, but taxpayers shored up other parts of the system. During that same time, Fannie Mae and Freddie Mac, the giant mortgage lenders, were taken over by the government. The $50 billion sale of Merrill Lynch to Bank of America was engineered by the Treasury and Federal Reserve. And insurance giant AIG received rescue loans in return for federal control.
But day after day, Wall Street was whipsawed by huge stock swings.
ALAN VALDES: You’d go home on a Friday with Bear Stearns, you’d come back Monday, they’d be out of business. You’d go home on a Friday with Merrill, you’d come Monday, they’d be gone.
KWAME HOLMAN: By early October, Congress passed the Troubled Asset Relief Program, or TARP. The $700 billion fund originally was intended to buy bad assets from banks. Ultimately, it was used to inject capital into the system.
In his speech today, Mr. Obama pressed again for overhauling the financial oversight system.
BARACK OBAMA: There will be those who argue we should do less or nothing at all. There will be those who engage in revisionist history or have selective memories and don’t seem to recall what we just went through last year.
But to them, I’d say only this: Do you really believe that the absence of sound regulation one year ago was good for the financial system? Do you believe the resulting decline in markets and wealth and unemployment, the wrenching hardship that families are going through all across the country, was somehow good for our economy? Was that good for the American people?
KWAME HOLMAN: The president already has sent Congress proposals for sweeping changes in financial regulation, the most extensive since the Great Depression. Key lawmakers in the House and Senate have promised action by the end of the year, but progress has been slow.
On the Senate floor today, Democratic Majority Leader Harry Reid insisted regulatory reform still is a priority for Congress.
SEN. HARRY REID, D-Nev., Senate Majority Leader: The history books will tell the tale of what happened in the weeks and months after September 14, 2008. Major investment banks that for decades anchored Wall Street simply disappeared. But the history books will also tell the tale of what happened before September 14, 2008, and the singular lesson from that gilded age is that we cannot wait until a system collapses before we act to save it.
KWAME HOLMAN: Still, many of the firms that were deemed too big to fail last year are even larger now. And government involvement in the private sector now extends from finance to insurance to the automakers.
Five of the biggest banks — Goldman Sachs, JPMorgan, Wells Fargo, Citigroup and Bank of America — recently posted record quarterly profits, totaling $13 billion, double the same period last year.
The fallout continues, as well. Today, a federal judge blocked a deal between federal regulators and Bank of America to settle accusations the bank withheld information about bonuses at Merrill Lynch. And there was word that New York state may file charges of its own.