July 23, 2010 — -- President Barack Obama is hoping to teach business America some lessons in financial responsibility with the recently passed financial reform bill, but far from Wall Street, he's starting in his own home – with potential babysitting jobs for Malia and Sasha.
The president said he's already started explaining the basic concepts of money, savings and interest to his daughters, Malia, 12, and Sasha, 9. He says they're almost old enough where they may be able to "earn some money babysitting," and that they have their own savings accounts.
For the rest of the country, Obama said he plans to have diligent watchdogs watch over the newly passed financial reform to protect consumers from the crisis that "devastated ordinary families over the last two years," but he added that there's been no decision on whether Elizabeth Warren will lead a key new watchdog agency.
The new legislation -- the most comprehensive financial overhaul in decades, which Obama signed into law Wednesday -- will create the Consumer Financial Protection Bureau to provide education, regulation and oversight under the aegis of the Federal Reserve.
Speaking in an exclusive interview at the White House with "Good Morning America" consumer correspondent Elisabeth Leamy yesterday, the president addressed the growing debate about Warren's possible role.
The bureau was Warren's brainchild, and the Harvard University professor is considered a top contender to lead it.
But her appointment is a point of fierce controversy. Banking and business groups oppose her leadership, while consumer organization and unions favor it.
The president, who was a student at Harvard while Warren taught there, said he had the "highest regard" for Warren, but that the decision about who would be appointed to lead the bureau hadn't yet been made. This week the president has had to deal with another high-profile publicity firestorm involving a federal appointee.
The appointee, Shirley Sherrod, lost her job at the U.S. Department of Agriculture due to allegations of racism that were proved to be unfounded. Yesterday she talked by phone to the president, who expressed his regret about the situation.
USDA Secretary Tom Vilsack "jumped the gun" in demanding Sherrod's resignation in part because of the media culture, Obama told Leamy.
"I've told my team and I told my agencies that we have to make sure that we're focusing on doing the right thing instead of what looks to be politically necessary at that very moment. We have to take our time and think these issues through," he said.
Obamas Teach Daughters About Personal Finance
After the public outcry, Sherrod was offered a new position with the government. The issue of Warren's role in the watchdog bureau has yet to be decided, but the president guaranteed that she would be "actively involved" in the process of making the bureau as effective as possible, and that she would work with him and with U.S. Treasury Secretary Timothy Geithner.
The Dodd-Frank Wall Street Reform and Consumer Protection Act is the most comprehensive financial overhaul law in decades. It gives the government stronger consumer watchdog powers and regulatory authority over Wall Street, among many other provisions.
The law will also establish the Office of Financial Literacy to teach the fundamentals of personal finance to youth and adults.
Many Americans have taken a financial hit because of the downturn in the stock market. Event the president didn't emerge unscathed: his daughter's college fund lost value.
While his retirement fund didn't take a hit -- mainly because most of the family's money ended up going into Treasury bills rather than stocks and equities, in order to avoid any possible conflicts -- the president said the family was lucky "by happenstance."
But his late grandmother worked in a bank and she was constantly monitoring her finances, and he saw the effect it had on her. Obama said he and his wife, Michelle, grew up in "very modest settings" and had a great deal of student debt when they graduated.
"One of the reasons that issues like consumer financial protection are so important to Michelle and myself is we're just not that far removed from what most Americans are going through," he said, adding that it was only a few years ago he that he and the first lady had high credit card balances, were trying to save for their young daughter's college educations and thinking about their own retirements.
President: We Know Exactly How People Feel
"We know exactly how -- folks who are working very hard and are relatively lucky in good jobs can feel the financial stress these days," he said.
At its core, the new law will offer the broadest protections to the American consumer. Businesses have registered strong opposition to the broad reforms, and have accused the president of micromanaging industry.
He says he understands their concern.
"There's no doubt that it's possible to create regulatory structures that are too burdensome, that could suppress creativity and innovation in the free market," he said. "I think that, just to take the financial regulatory bill, here's an example of where we struck the right balance."
The law emphasizes transparency, and the administration sought input from industry to ensure that the regulations be effective without being onerous.
"We've got to have good regulators, people who are serious about their job, who understand that they are looking out for the public interest, that aren't subject to industry capture," he said.
Pointing out that reckless behavior on Wall Street has led to the loss of eight million jobs, the decline of home values and trillions of dollars in lost wealth, Obama said he didn't think any American believed it didn't make sense to monitor the financial industry more carefully.
"That's what most Americans would expect, because, sadly, they're the ones who have ended up bearing so much of the costs of decisions that were made by people who weren't really paying attention, and frankly, a government that wasn't paying enough close attention," he said.
Even though Obama's administration has passed historic health care and financial reform laws, his poll numbers have fallen at a new low.
Asked how he viewed the polling, Obama said his administration inherited the biggest financial crisis since the Great Depression and that even though the economy was growing again, it would take time to recover.
People were understandably frustrated, he said.
Nobody talks about the gains the administration has made on education reform, the president said, adding that the payoff would come in 10 or 15 years, well after his presidency was over.
"The fact that we have elevated reform, made college more affordable, all those things are going to help make America more competitive the long term. And that's how I judge myself and hopefully ... that's how I'll ultimately be judged. In the meantime, you know, it's just political reporting and -- so I don't spend too much time worrying about it."