From Sunlen Miller:
Noting that there should be no dividing line between Wall Street and Main Street, the president today painted an American face on the effects of the financial downturn and urged the financial industry to join with him to pass financial reforms, for the good of the country.
“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,” President Obama said today. “Because ultimately, there is no dividing line between Main Street and Wall Street. We will rise or we will fall together as one nation. And that is why I urge all of you to join me.”
Speaking at Cooper Union – in the city at the heart of the nation’s financial sector — President Obama noted that just two years prior at that very spot he had first called for similar reforms while speaking of the “failure of responsibility” of Wall Street.
“I take no satisfaction in noting that my comments then have largely been borne out by the events that followed,” the president said. “But I repeat what I said then because it is essential that we learn the lessons from this crisis so we don’t doom ourselves to repeat it. And make no mistake that is exactly what will happen if we allow this moment to pass — and that’s an outcome that is unacceptable to me and it’s unacceptable to you, the American people.”
Mr. Obama said that the both bills – the already passed House of Representatives version, and the Senate version which is currently being debated — represent significant improvements to the “flawed rules” of the financial industry.
“Without it, our house will continue to sit on shifting sands, and our families, businesses, and the global economy will be vulnerable to future crises. That’s why I feel so strongly that we need to enact a set of updated, commonsense rules to ensure accountability on Wall Street and to protect consumers in our financial system.”
The president outlined the four pillars of the Senate bill, which he touted would bring more stability to the economy.
First – protection of the financial system, the broader economy and American taxpayers in the event that a large financial firm begins to fail.
“I’ve insisted that the financial industry, not taxpayers, shoulder the costs in the event that a large financial company should falter. The goal is to make certain that taxpayers are never again on the hook because a firm is deemed ‘too big to fail.’”
While calling it a “a legitimate debate” over how to best ensure that taxpayers are held harmless, the president called out those, like Senator McConnell, though he did not mention his name, who suggest this would lead to future taxpayer bailouts.
“What’s not legitimate is to suggest that somehow the legislation being proposed is going to encourage future taxpayer bailouts, as some have claimed. That makes for a good sound bite, but it’s not factually accurate. It is not true,” Obama said. “Nobody should be fooled in this debate.”
Secondly, Obama said, the reform would bring new transparency to many financial markets – by bringing derivatives out from the shadows.
“Reform will rein in excess and help ensure that these kinds of transactions take place in the light of day,” Obama said noting the concern about the changes over derivatives. “These reforms are designed to respect legitimate activities but prevent reckless risk taking. That’s why we want to ensure that financial products like standardized derivatives are traded out in the open, in the full view of businesses, investors, and those charged with oversight.”
Third, the president said, this plan would enact the “strongest consumer financial protections ever,” by creating an agency to look out for consumers.
“This financial crisis wasn’t just the result of decisions made in the executive suites on Wall Street; it was also the result of decisions made around kitchen tables across America, by folks who took on mortgages and credit cards and auto loans. And while it’s true that many Americans took on financial obligations that they knew or should have known they could not have afforded, millions of others were, frankly, duped. They were misled by deceptive terms and conditions, buried deep in the fine print.”
Noting the concern of some in the financial industry about these new protections, the president said that “unless your business model depends on bilking people,” there should be little fear of the new rules.
Lastly, the final component of reform, the president said, is that shareholders would have new power in the financial system.
“They will get what we call a say on pay, a voice with respect to the salaries and bonuses awarded to top executives. And the SEC will have the authority to give shareholders more say in corporate elections, so that investors and pension holders have a stronger role in determining who manages the company in which they’ve placed their savings.”
The audience today included leaders from the financial industry, members of the President’s Economic Recovery Advisory Board, consumer advocates, people impacted by the downturn of the economy, local elected officials and Cooper Union students and faculty.
More from ABC’s Matt Jaffe and Karen Travers HERE.