Obama Warns Wall Street Against Risky Behavior
ROBERT SIEGEL, host:
From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.
MELISSA BLOCK, host:
And I'm Melissa Block. President Obama traveled to the heart of the financial crisis today, Wall Street, to deliver a tough message. On this day last year, Lehman Brothers collapsed lighting the spark that ignited the worldwide financial crisis. Today, the president warned financial leaders that just because things are getting back to normal, it's not time to go back to business as usual. NPR's national political correspondent Mara Liasson reports.
MARA LIASSON: Just one year ago, a handful of the world's largest financial firms disappeared, starting a crisis that obliterated $5 trillion of American wealth. Eight months later, the president said, the storms are beginning to break, but at the same time some of the old habits are returning to Wall Street. The president warned the titans of finance that they were in danger of ignoring the lessons of Lehman.
President 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.
LIASSON: But today on Wall Street things haven't changed that much. There are fewer investment banks, but the ones that remain are still taking big risks, making big profits and handing out huge bonuses, secure in the assumption that the federal government will bail them out if they get in trouble again - and all that at a time of low growth and high unemployment in the rest of the economy. With that in mind, Mr. Obama said he wants to pass legislation to prevent future Lehman's from wrecking the economy.
Pres. OBAMA: This is intended to put an end to the idea that some firms are too big to fail. For a market to function, those who invest and lend in that market must believe that their money is actually at risk.
LIASSON: The president said he wants banks to have a bigger cushion of capital and he's calling for a new consumer finance agency to prevent credit card and mortgage abuses. But there's nothing in his bill that would make too-big-to-fail, too-big-to-exist, as some economists have proposed. The president has suffered a backlash for all of the governmental intervention in the financial sector and in the auto industry, and that's making his effort to overhaul another big chunk of the American economy, health care, harder to pass. Today he described himself as a reluctant shareholder. He said he certainly didn't run for president to bail out banks or intervene in the capital markets, but the president said…
Pres. OBAMA: The lack of sensible rules of the road, so often opposed by those who claim to speak for the free market, ironically led to a rescue far more intrusive than anything any of us - Democratic or Republican, progressive or conservative - would have ever proposed or predicted.
LIASSON: The president said the federal government is now beginning to unwind its intervention, pulling back the extraordinary measures it put in place to keep the financial sector afloat. Now he said, it's time to create new rules of the road so that history does not repeat itself. And he called on Congress to pass regulatory reform this year, and he posed this question to his critics:
Pres. OBAMA: 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?
LIASSON: The president has now made it clear he has two legislative priorities this year: the health care overhaul and financial re-regulation. And while he very well may get new financial rules passed, the question, as in the health care fight, is whether the final legislation will actually fix the problem.
Mara Liasson, NPR News, Washington. Transcript provided by NPR, Copyright NPR.
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