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Obama urges action on financial regulatory overhaul

By Scott Wilson
President Obama on Saturday culminated a week of lobbying for new Wall Street rules by sharply criticizing the financial sector for damaging the economy and Republican lawmakers for opposing legislation to more closely regulate the financial system.

In his weekly radio and Internet address, Obama said "special interests have waged a relentless campaign to thwart even basic, common-sense rules" that he contended would prevent the kind of financial speculation that helped cause the recession.

"The consequences of this failure of responsibility - from Wall Street to Washington - are all around us: 8 million jobs lost, trillions in savings erased, countless dreams diminished or denied," he said. "I believe we have to do everything we can to ensure that no crisis like this ever happens again."

The Senate Banking Committee endorsed a financial regulatory overhaul bill last month on a party-line vote, and the Senate's 41 Republicans expressed blanket opposition to the measure Friday in a letter to Senate Majority Leader Harry Reid (D-Nev.)

"As currently constructed," the Republican senators wrote, "this bill allows for endless taxpayer bailouts of Wall Street and establishes new and unlimited regulatory powers that will stifle small businesses and community banks."

In his radio address, Obama called that assertion, first made Tuesday by Senate Minority Leader Mitch McConnell (Ky.), "cynical and deceptive."

But the Republican opposition raises the prospect of a Senate filibuster, and the possibility that both parties will go to the polls in November without having addressed the regulatory lapses that helped cause the most severe economic downturn since the Great Depression.

Obama has urged lawmakers to act on the legislation, which he said in his radio address would strengthen consumer protections for investors, regulate the derivatives market and give shareholders more say on such issues as executive pay.

"Now, unsurprisingly, these reforms have not exactly been welcomed by the people who profit from the status quo - as well their allies in Washington," said Obama, who added that he hopes "Democrats and Republicans can find common ground and move forward together."

"Every day we don't act, the same system that led to bailouts remains in place - with the exact same loopholes and the exact same liabilities," he said. "And if we don't change what led to the crisis, we'll doom ourselves to repeat it. That's the truth. Opposing reform will leave taxpayers on the hook if a crisis like this ever happens again."

By Scott Wilson  |  April 17, 2010; 6:00 AM ET
Categories:  44 The Obama Presidency  
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Next: West Wing Briefing: Monday morning edition

Comments

You forgot to list the Fed., theoldmansays.

1. Community Reinvestment Act creation(Carter) and expansion(A.(Clinton))) that led to banks being required to give loans to people that couldn't afford them, or else be punished for not meeting certain ethnic quotas of customers.
(A.ACORN had a hand in this, with accusations of "Redlining," that the banks were discriminating against customers based on race. This was later proven to be false, that people were being denied loans because of income and other factors and that a majority of those individuals happened to be blacks and other minorities; Yet the expansion of the Act stuck.)

2. Freddie Mac, Fannie Mae, ACORN, other groups pushed for more sub-prime loans into the market, as well as other loans that were federally backed and required little or no down payment by the consumer.

The U.S. government also had a hand in the crash, as well as liberal group ACORN and others. The regulations coming down the pike will likely further depress the market, based on the fact that the Fed. will raise taxes.

It will also have to raise taxes on the so-called "middle class" in order to recoup much of our debt and pay for entitlement expansion(Ooh, VAT tax? Lapsing Bush Tax Cuts in 2011? Increased taxes of different stripes in the HCR bill?), because the State Behemoth is growing bigger and needs more revenue to slake its thirst and fill its belly.

Posted by: OfConservativeMind | April 19, 2010 1:18 PM | Report abuse

A REPUBLICAN FILABUSTOR ON FINACIAL REFORM

A REPUBLICAN FALL BUSTOR ON PARTY REBUILD

Posted by: theoldmansays | April 19, 2010 12:58 PM | Report abuse

GREED WAS THE CAUSE OF EVERY PART OF THE ECONOMIC DOWN TURN
1 HEALTH CARE COST
2 BANKS RISKS FOR PROFIT
3 OIL COMPANYS PROFITS FUTURES TRADING
4 FOOD [MIDDLE] MAN EXCESSIVE PROFITS
5 SCHOOLS AND STATE BUDJECTS $7,000.00 A YEAR INCREACE IN PREMIUMS PER PERSON?????
6 ALL THE ABOVE STOPPED CASH FLOW AND CAR BUYING,, MORGAGE PAYMENTS,,ETC.
7 CONTROL OF GREEDY BONUSES TAKEN BEFORE STOCKHOLDERS DIVIDENS

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Posted by: itkonlyyou16 | April 19, 2010 9:04 AM | Report abuse

I want to know more about Dodd, Reid and the Democratic Senate Campaign Committee taking money from John Paulson.

I would hope that the Washington Post inquires into what was the quid pro quo??

Posted by: JoeJankovic | April 18, 2010 6:17 PM | Report abuse

I want to know more about Dodd, Reid and the Democratic Senate Campaign Committee taking money from John Paulson.

I would hope that the Washington Post inquires into what was the quid pro quo??

Posted by: JoeJankovic | April 18, 2010 6:17 PM | Report abuse

And what secret agency "polices" the financial system/currency?

DID SECRET HOMELAND AGENTS USE TSA PHILLY AIRPORT SECURITY CHECK TO DO A 'PSY OP' ON UNJUSTLY TARGETED AMERICAN JOURNALIST?

See latest comments:

http://nowpublic.com/world/vic-livingston-now-facebook-will-reader-comments-be-censored OR http://NowPublic.com/scrivener RE: "U.S. Silently..." and "Gestapo USA..."

Posted by: scrivener50 | April 18, 2010 11:32 AM | Report abuse

fromtheboulevards

You are correct. My post makes me sound like a stalwart defender of Wall Street. It's an untenable position, one from which I must make my way down.

Indeed, I must agree there is something that can be said about regulating how far involved banks can get into purchasing derivatives and other risky products. Responsible regulation that protects the consumer whilst seeking not to damage the industry at large seems like a viable step to me.

The human nature I cite is that which makes up the infinite number of transactions in the market each and every day. As a government, if you give an individual a leg up, do you not expect them to take it?

Simply defending human actions as being in their "nature" is definitely not the right place to start, and I concede the point. The fact is that many people in this society make decisions based on what I would call moral gray areas in their thinking. The cause of this lack of morality perhaps being lack of faith, lack of wanting to be judged for one's actions, lack of caring for what one's actions do to affect other individuals(Sociopathy).

Ultimately, you cannot completely regulate bad behavior out of any human system because it is difficult to regulate human behavior, period. Efforts to try and "perfect" human society by regulating ALL bad behavior might well lead us to a totalitarian police state. Not to say that you support that, it's just one extreme.

Any extensive regulation on the markets by the United States government will likely have but one of two objectives: To remove some/much/all of the inherent risk from the market, or depress the market through taxes and regulations targeted at slowing business growth. That's one way to stop a bubble, eh?

Posted by: OfConservativeMind | April 18, 2010 8:38 AM | Report abuse

If ya really want to know what the Dems are all about and where were headed as a country,check this out.Wake up people!!!http://directorblue.blogspot.com/2009/11/dont-cry-for-me-america.html

Posted by: votingrevolution | April 18, 2010 5:53 AM | Report abuse

There were two big flaws: $600 billion in derivatives that weren't covered by any regulation at all, in the US or elsewhere. This was the string that was pulled by Lehman's bankruptcy and AIG's disaster. The second flaw was that both commercial and investment banks were permitted to sink so much exposure into derivatives.

Curious that the Republicans simply recite the lines their consultant gave them ("repeat bailout three times") and don't think that these problems need fixing.

Posted by: thmas | April 17, 2010 11:30 PM | Report abuse

his is GREAT ! Ok - Let's let this reform bill go to Filibuster and put this on C-Span day and night for a month - Let's make a NATIONAL SPORT out of watching the Republican Party defend Wall Street against financial reform !

Let it go on and on and on - deep into the August Heat !

Let's do this ! NOW !

Posted by: PulSamsara | April 17, 2010 11:23 PM | Report abuse

Reverend Jerry Falwell was President Reagan's point man. Reverend Sharpton is assisting President Obama. So what is your point?

Posted by: xcessiveheat | April 17, 2010 9:20 PM | Report abuse

Sharpton is Obama's link to the streets

NEW YORK – The Rev. Al Sharpton is a "lightning rod" for President Barack Obama on inner city streets, Obama's former Harvard mentor and friend said Saturday at a forum in Harlem.

LOL !!

Posted by: jas7751 | April 17, 2010 9:10 PM | Report abuse


Why not enforce existing law?

Evidently, someone did a flowchart of the existing system and found that related controls and processes were neither adequate and/or effective.

All it takes is a good performance system auditor to look at system input, process, output and feedback.

Conclusion: "Boss, This system is beyond patchwork. It's best to start over with goals that is measurable,economical, acceptable and congruent, e.g., in harmony with related goals."

Posted by: xcessiveheat | April 17, 2010 9:10 PM | Report abuse

Yea, but.

No one is using the existing rules to prosecute obvious financial crimes.

DOJ has filed nothing against the banks and investment houses engaged in years of fraudulent misrepresentations which allowed them to steal their customers' money without rebuke.

The banks and credit card companies for years have collected interest and fees BEYOND the terms of the contract they had with their customers, and no one is prosecuting them.

So why do you want more rules?

You are not enforcing existing law.

Posted by: inono | April 17, 2010 8:33 PM | Report abuse


You Say:

"Has there ever been an Administration more packed with ex-Wall Street cronies than this one? If you believe Dodd and Geithner can be trusted with overseeing our financial system..."

I Say:

If a fish were able to talk, who could tell you more about water?

By the same token, only ex Wall Street cronies (not you), are able to tell us what's really going down there.

Did you know that some of our best wardens in federal prisons are former convicts?

Posted by: xcessiveheat | April 17, 2010 7:21 PM | Report abuse

Given the little problem that Goldman Sucks has stepped into over the last couple of days you'd think the Republicans would have enough sense to drink a big 'ole glass of shut-the-hell-up. But they're waaaay too busy still trying to screw the American public by shilling for Wall Street. What a bunch of deceitful little weasels.

Posted by: Bushwhacked1 | April 17, 2010 7:08 PM | Report abuse

This financial regulation beef is different than the health care reform.

If I was Obama I would have another debate on C-SPAN say one month before the mid-term elections. I Would then (assuming is possible) have the Senate have a floor debate on the bill say three days before the elections. If the party of "NO WE CAN'T" and "Status Quo you can believe in" decides to filibuster, then let them.

Let the American people see live on television who is actually trying to make a serious reform in rder to protect the American people and who is not.

The result I predict will be merciless on election day.

Posted by: thabomuso | April 17, 2010 6:20 PM | Report abuse

This financial regulation beef is different than the health care reform.

If I was Obama I would have another debate on C-SPAN say one month before the mid-term elections. I Would then (assuming is possible) have the Senate have a floor debate on the bill say three days before the elections. If the party of "NO WE CAN'T" and "Status Quo you can believe in" decides to filibuster, then let them.

Let the American people see live on television who is actually trying to make a serious reform in rder to protect the American people and who is not.

The result I predict will be merciless on election day.

Posted by: thabomuso | April 17, 2010 6:18 PM | Report abuse

has there ever been an Administration more packed with ex-Wall Street cronies than this one? If you believe Dodd and Geithner can be trusted with overseeing our financial system, then come see me about a bridge...Dodd should resign today and get an early start to his future lobbying gig for Wall Street.

Posted by: iculus | April 17, 2010 5:19 PM | Report abuse

has there ever been an Administration more packed with ex-Wall Street cronies than this one? If you believe Dodd and Geithner can be trusted with overseeing our financial system, then come see me about a bridge...Dodd should resign today and get an early start to his future lobbying gig for Wall Street.

Posted by: iculus | April 17, 2010 5:19 PM | Report abuse

has there ever been an Administration more packed with ex-Wall Street cronies than this one? If you believe Dodd and Geithner can be trusted with overseeing our financial system, then come see me about a bridge...Dodd should resign today and get an early start to his future lobbying gig for Wall Street.

Posted by: iculus | April 17, 2010 5:18 PM | Report abuse

To: fromtheboulevards, OfConservativeMind
You both have good points. There are government laws (many bipartisan) have contributed to this debacle, such as the creation of Fannie and Freddie, and some laws, like Glass-Steagall, which could have stopped it, or at least made it manageable.

What we really need, is transparency (an exchange for derivatives and swaps, for instance) and responsibility, written in law.

Posted by: ProfElwood | April 17, 2010 3:35 PM | Report abuse

If we allow greedy banks, greed, selfish people corrupted the economy. It's going to corrupt marxism, communism, fascism, capitalism, and all economic traditions. It will create inflation around the world and making difficult for people to buy things. Extremely difficult to find jobs.

Our dollar bill says "In God We Trust"; we lost soo much faith on that thing because the widespread of Greed and malfeasance. People will start giving up God and turn into false ones. People aren't not going to help to succeed business ventures.

Very exhausting and scary....

Posted by: Readist | April 17, 2010 2:52 PM | Report abuse

OfConservativeMind wrote: "It is human nature to take advantage where one can find it, nowhere more than in a high-stakes financial market. The blame needs to rightly asserted, even if people on Wall Street ended up profiting from this debacle."

It was also the simple "human nature" of those priests that made it ok for them to sexually abuse children. And it's just "human nature" for a man to stalk, beat and rape a woman, right? Isn't it just his "nature" urging him to do so?

So, from now on, should prosecutors ponder whether it's just a woman's "nature" that causes her to steal checks and forge them? Should they let someone off if it was just their "nature" that caused them to drive drunk for the 5th time? If someone breaks into your home, and steals the things you worked hard for, should the Judge say "but they're a thief, that's just their nature, you can't blame them."

EVERYONE needs to think about the consequences of their actions. Some people are more capable of that than others. But you can't convince me that the financiers putting these trades together lacked the critical thinking skills required to understand the consequences of their devices.
So, ConservativeMind, what is it your suggesting to correct the "human nature" of the markets...? Or, does this boil down to a justification of your politics? Because it sounds like your actually saying, "I'm a 'conservative' and I don't care what practices and devices wall street uses to make money I want to blame the 'other' political party."

Posted by: fromtheboulevards | April 17, 2010 12:37 PM | Report abuse

Stunning and disheartening to see that even among the readers of a paper like this, confusion and sheer dopiness are in abundance. The Tea Partiers are clueless -- their so-called populist movement is being financed by some of the most regressive corporate characters out there who are trying to manipulate them into supporting the same kinds of policies that have heart the membership of the Tea Party the most. It's a shell game. The responsibility lies with the big banks and multinational corporations, and these entities are trying to claim that government is the problem. And some fools are buying it.

If Tea Partiers are tired of a disproportionate amount of taxes hitting them, where do they expect tax money to come from? The poor don't have it. So, yes, the affluent and rich -- the people making in the high six figures or more. Yet they're supporting the very policies that would relieve the rich from paying their share. They claim rich people create the businesses that provide opportunity for others. This is largely hooey. The rich find tax loopholes and export American jobs to the third world. Major corporations end up paying no taxes while the American middle class end up being hit.

If the Tea Partiers were a genuinely independent movement, they'd disassociate themselves from the likes of Fox (another multinational corporation looking for tax breaks) and back the folks who genuinely are trying to shift the tax burden to the super-wealthy who can afford it and aren't paying their share. But that's not a Republican policy, is it?

Posted by: dgsweet | April 17, 2010 12:13 PM | Report abuse

Why don't the liberals get it?

There was an enormous amount of regulation already in place when all this was going on.

Bush asked the congress to improve the regulation of Fannie and the congress refused. The CBC rose to the defense of Franklin Raines, even as the guy was looting the store. Rahm emanuel got his bite of the cherry too!

Chris Dodd got special deals, Barney Frank used the "system" to advance his idiotic utopian dream and the wall street guys figured out a way to make money on all this.

The bottom line: Our government FAILED US. Now the liberals expect America to stand by while the same asleep at the switch and on the payroll bunch creates new regulation? Yeah, that'll work out well. I wonder how much more payola Dodd and co will get this time around?

Why don't the liberals get it?

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Posted by: itkonlyyou12 | April 17, 2010 10:54 AM | Report abuse

I would have much more faith that financial regulatory reform was possible until I learned today that John Paulson was a major contributor to Harry Reid, Chris Dodd and the Democratic Senate Campaign Committee.

Now I have serious doubts that it is possible!

Posted by: mwhoke | April 17, 2010 10:53 AM | Report abuse

This is a legitimate opportunity for Democrats and the president. Wall Street is the leading source of rage among ordinary Americans, even more than Congress. For the GOP to openly side with them is politically troubling.

http://www.political-buzz.com/

Posted by: parkerfl1 | April 17, 2010 10:47 AM | Report abuse

President Obama is absolutely right.

We have huge major corporations now accused of buying worthless derivatives made up of loans everyone knew were bad. Then they insured them so that when they failed, the corporations would get the insurance money and the ordinary people would lose their homes or go into bankruptcy. And even more than that, when the whole house of cards came down, the taxpayers would have to bail the big guys out.

And still the Republicans say we don't need strong regulation?

Come on! You can protect the ordinary taxpayers or the billion-dollar corporations who have exploited ordinary people and looted the treasury with bailouts. The GOP is on the side of the bailed out big guys, the corporations and their bonus-rich CEOs.

Let the corporations have to keep a major interest in the securities they sell. Let them pay into accumulated funds which will then be used to help bail them out when they take us again. And restrict these unintelligible derivatives they use to take ordinary people and make billions for themselves.

Those who want stronger rules are trying to protect ordinary people from Wall Street con men and women. The Bush-GOP years show that such protection is needed.

Obama is right. Regulate these crooked schemes.”

Posted by: tinyjab40 | April 17, 2010 10:40 AM | Report abuse

A key component that helped the housing bubble become what it did was the Community Reinvestment Act. This was an act designed to get people who normally could not afford homes into homes using Federally chartered banks as backing, both for liability and some of the cost. As created by Jimmy Carter's Congress, it was simple enough to help out some people.

Then to Clinton; One of his Congresses expanded the Community Reinvestment act to address instances of "redlining," which was a allegedly a form of financially racial discrimination. Apparently a disproportional number of blacks were being denied loans. It was later proven out that the causality for such was the fact that was not race, but the finances of the individuals applying for loans. Nevertheless, the newer revised law forced banks onto a rating system that discriminated against banks who would not meet loan quotas of minority customers.

Next, organizations like ACORN made a big push to get poorer people into housing, many of them using a type of loan known today as the sub-prime loan(Anybody who actually knows what happens with these loans now would likely not take one). These pushes, as well as many other people accepting sub-prime loans at the time, were instrumental in bringing down the housing market.

Fannie Mae and Freddie Mac: Two of the largest Federally chartered banks, they were one of the straws that broke the camel's back. With very little oversight by Congress(which was challenged by both Bush(2003) and McCain(2007), but was unheeded nevertheless), these two banks purchased and backed many of the sub-prime loans on the market, as well as many other standard loans that ultimately defaulted after the crash. They also bought up "toxic" assets from ailing banks, all while using accountants to cook the books to show certain profit margins so their execs could get fairly large bonuses(This obviously didn't just happen with private companies like AIG).

Derivatives: A buzz word then and now, apparently the pivot-man in the financial cluster@#$@. Not only did banks apparently use derivatives to defer their risk on many sub-prime loans, but they did so with financially unstable companies that could not afford to pay out on their obligations once those loans defaulted.

Governmental regulation of the housing industry played a huge part in bringing the economy to its knees. The blame needs to rightly asserted, even if people on Wall Street ended up profiting from this debacle. When the Fed. artificially influences the market, does no one expect the market to react? It is human nature to take advantage where one can find it, nowhere more than in a high-stakes financial market. Now the market will be punished for the mistakes of the Fed.

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Posted by: itkonlyyou12 | April 17, 2010 9:58 AM | Report abuse


If it was up to the GOP, Goldman Sacks would be receiving the medal of honor. Doing NOTHING is not a policy for anyone, but the GOP.

Posted by: edanddot | April 17, 2010 9:38 AM | Report abuse

I think Obama, Clinton and Pelosi owe tea party participants an apology. After all, they are the ones that are part of the %50 of Americans that have worked hard and pay taxes and provide Congress and the President with a salary, Cadillac health care plans, retirement, Air Force One and a fleet of jets and helicopters, security detail, etc. If you want to balance the budget let's start with cutting some of these benefits as well as serious investigations into Fannie and Freddie.

Posted by: 45upnorth | April 17, 2010 9:37 AM | Report abuse

The Messiah much awaited man to solve problems. I don't think Obama is a Messiah but he does tackle the hard problems of our times in a common sense method. When Obama speaks he actually makes common sense which is a breath of fresh air after the last president. Obama might have learned a valuable lesson after the health care refrom , to go as public as possible with what is in reform legislation, then let the people see what is going on for themselves. This light of day would be like a steak thru the republicans heart! its all over then for the party of NO because the people see for themselves the lies being feed to them.

Posted by: ggrant9170 | April 17, 2010 9:19 AM | Report abuse

For me the current lack of clear far reaching rules for the financial industries is responsable for the tremendous losses people all over the world have had to face and the republicans are showing not to give that much thought. Free market is dead, please wake up to that and stop making the markets cassinos in which the haves are gambling and betting against morals and ethics.

Posted by: lpdegeer | April 17, 2010 9:01 AM | Report abuse

I just finished reading Michael Lewis's The Big Short. My first response to the profits carried away by Wall Strest brokers involved in the sub-prime debacle was: its unbelievable; then, its repulsive; and finally, its hilariously American. Who else could rationalize such blatant fraud as the financial leader of the developed world? The corruption in our financial system is systemic, the sub-prime mortgage racket was just the most obvious and most recent example of grifters (Wall Street) fleecing the unsuspecting (the American people).
Caveat Emptor. Anyone who can't wade through Lewis' complex web of Wall Street traders, rating agencies, banks, brokers and acronyms probably should get out of investing now. The years of having Wall Street 'up' while the American people lost jobs and lived on credit, should have triggered a wariness in all of us of the developing disparity. WS brokers are a breed apart. Their motivation for growing our economy is purely personal. But we have spawned them and now it is time to rein them in. Regardless of politics, everyone can remember when banks were a service industry there to manage money and taking a reasonable rate of return for the privilege? Our investments need to once again become a security and not a liability for which we continue to pay.

Posted by: pricesuzhou | April 17, 2010 8:43 AM | Report abuse

Why oh why didn't the great Messiah press for Fannie to be regulated when he was a US Senator? Just think of the billions he could have saved our economy if he had put the people before his party.

Posted by: cschotta1 | April 17, 2010 7:07 AM | Report abuse

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