The Obama administration is beginning to cast a more welcoming tone toward Wall Street now that the president has enacted sweeping new financial regulations.
After a year of clashes during the legislative debate, the administration, regulators and the industry will spend the next few years negotiating the fine details of the revamp.
Gone from the rhetoric were some of the bluntest words of the past year, such as when Obama in December said he did not run for the presidency to help “fat cat bankers on Wall Street.”
The new financial regulations come against the backdrop of a year-long fight between the Obama administration and leading U.S. business interests over whether a broad range of laws, including much of the president’s domestic agenda, are helping or hurting the economy.
The U.S. Chamber of Commerce and Business Roundtable have prominently clashed with the administration in public speeches and a series of letters with top White House staffers Rahm Emanuel and Valerie Jarrett. Major banks and other financial interests have started to pull back on campaign contributions to Democrats, which helped propel the party to power in Congress and the White House.
On Wednesday night, Obama traveled to New York City to hold two of his biggest fundraisers there since taking office.
Consumer advocates and some in the financial industry are starting to notice the change in rhetoric from the administration.
“The language they used to sort of vilify lenders by talking about their compensation or greed — it’s all done very much with a political agenda in mind, in terms of passing the bill and generating public support,” said John Taylor, head of the National Community Reinvestment Coalition. “It’s now roll-up-the-sleeves time, and put the rhetoric aside. I can see from all sides that is really happening.”
Financial lobbyists say they are cautiously optimistic about an improving relationship with the administration. “There is a general need to restore, repair and rebuild relationships,” one lobbyist said recently.
Treasury Secretary Timothy Geithner next week will give a broad speech in New York on financial reform, laying out the guiding principles of the bill and how regulators will go about implementing it. The speech at New York University’s business school will be open to the public and feature a question-and-answer session.
Senior Treasury and White House officials have already said they expect the industry to be heard throughout the process of writing and enforcing the hundreds of new financial rules. Many of the regulations will be written by independent agencies.
“I think the industry as an independent stakeholder has the right and should have the leeway to weigh in and express how these things might or might not affect them,” Diana Farrell, deputy director of the National Economic Council, said recently.
The Securities and Exchange Commission (SEC) and Federal Deposit Insurance Corporation (FDIC) have already outlined new ways of disclosing how consumer advocates and the industry attempt to influence the regulations.
Mary Schapiro, SEC chairwoman, said this week that the agency would have a public website with all the comments submitted on scores of rules on executive compensation, shareholder rights and other hot-button issues. The commission will also make public the agenda of meetings between agency staff and interest groups.
The financial industry has been preparing for months for the debate with regulatory agencies. By some counts, the agencies will need to put forth hundreds of new rules and more than 50 studies that will flesh out the full reach of the law.
Much of the early focus is on the creation of a new Consumer Financial Protection Bureau that will have broad authority over home loans and credit cards, among other financial products. The administration has a team of staffers working on the creation of the new agency.