By Sam Youngman - 04/22/10 03:54 PM EDT
President Barack ObamaBarack ObamaTrump links WikiLeaks to media ‘voter suppression’ What will be in Obama’s Presidential Library Lots of (just) talk about 'draining the swamp' MORE on Thursday made his case for financial regulatory reform mere blocks from the heart of the U.S. financial sector.
Obama used his address in Manhattan to push back on Republican criticism that Democratic plans for financial reform are a ticket to endless bailouts, and to ask Wall Street to join his efforts.
“And make no mistake, that is exactly what will happen if we allow this moment to pass — an outcome that is unacceptable to me and it’s unacceptable to you, the American people,” Obama said.
Democratic proposals for reform will end “the failure of responsibility” that led to the financial crisis two years ago, Obama told an audience that included bankers, elected officials and labor union representatives.
Obama spoke as debate continued in the Senate over legislation approved on a party-line vote by the Senate Banking Committee. Majority Leader Harry ReidHarry ReidReid: 'I have set the Senate' for nuclear option Obama in Nevada: 'Heck no' to Trump, Joe Heck Dems double down on Nevada Latino vote MORE (D-Nev.) set up a procedural vote for Monday on the legislation that at press time seemed likely to fail. Republicans and Democrats alike said they had no deal on Thursday.
The financial industry has lobbied heavily against provisions in the Senate bill that Obama has supported, and Democrats and the White House in recent weeks have stepped up their rhetoric against Wall Street.
The Securities and Exchange Commission brought fraud charges against Goldman Sachs last week, and Democrats have insisted those charges show why their financial reform legislation is necessary. Goldman has vigorously denied that it did anything wrong.
Goldman Sachs CEO Lloyd Blankfein, who was in the audience for Obama’s speech, will appear before a congressional committee next week to talk about the role investment banks played in the financial crisis, Sen. Carl LevinCarl LevinThe Fed and a return to banking simplicity What Our presidential candidates can learn from Elmo Zumwalt Will there be a 50-50 Senate next year? MORE’s (D-Mich.) office said Thursday.
Blankfein will testify next Tuesday before the Permanent Subcommittee on Investigations, on which Levin serves as chairman.
The hearings will offer lawmakers an opportunity to grill the executives in public for the first time since the firm was hit with the Securities and Exchange Commission (SEC) charges.
Republicans have been suspicious of the timing of the SEC’s announcement, but the White House maintains that it knew nothing about the charges coming from the independent body.
In his address in New York, Obama urged Wall Street to support the legislative efforts to change the financial system’s rules.
“And for those of you in the financial sector, I’m sure that some of these lobbyists work for you and they’re doing what they are being paid to do,” Obama said. “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.”
The House has already approved a financial overhaul bill, and differences between the two measures would have to be addressed if and when the Senate completes its legislation.
Public anger over the bailouts of large banks has continued to reverberate across the country, and both parties have tried to use it to their advantage in the debate over financial reform.
Obama on Thursday spoke of his belief in the free market, but scolded Wall Street for practices that he said had caused a financial breakdown that hurt millions of Americans.
“A free market was never meant to be a free license to take whatever you can get, however you can get it,” Obama said.
“That’s what happened too often in the years leading up to this crisis,” Obama said. “Some — and let me be clear, not all — but some on Wall Street forgot that behind every dollar traded or leveraged there’s a 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.”
The president took issue with the claims of some Republican senators, including Minority Leader Mitch McConnellMitch McConnellPelosi urges end to Pentagon's clawback of soldier overpayments Coffman’s stance on climate change disingenuous, irresponsible Bill Murray honored with Mark Twain Prize MORE (R-Ky.), who have said that the bill will lead to countless future bailouts at the expense of taxpayers.
Obama said that in the Senate there is a “legitimate debate taking place about how best to ensure taxpayers are held harmless in this process.”
“But what’s not legitimate is to suggest that somehow the legislation being proposed is going to encourage future taxpayer bailouts, as some have claimed,” Obama said. “That makes for a good sound bite, but it’s not factually accurate. It is not true.”
Obama said it is the current regulatory system that “led to a series of massive, costly taxpayer bailouts.”
“And it’s only with reform that we can avoid a similar outcome in the future,” Obama said. “In other words, a vote for reform is a vote to put a stop to taxpayer-funded bailouts. That’s the truth. End of story. And nobody should be fooled in this debate.”