NEW YORK - (AP) - President Barack Obama rebuked Wall Street forrisky practices Thursday even as he sought its leaders' help for"updated, commonsense" regulations to head off any new financialcrisis.
"Ultimately there is no dividing line between Main Street andWall Street. We rise or we fall together as one nation. So I urgeyou to join me," Obama said in a high-stakes speech near thenation's financial hub.
The president acknowledged differences of opinion over how tobest protect bailout-weary taxpayers but denounced criticism fromsome Republicans who claim a Democratic-sponsored bill headed forSenate action would encourage rather than discourage futurebailouts of huge banks.
"That may make for a good sound bite, but it's not factuallyaccurate," Obama said. He said the overhaul legislation would"put a stop to taxpayer-funded bailouts."
Obama's speech came at a delicate time in negotiations over theSenate measure, which could be debated next week. The House haspassed its own version of financial overhaul legislation. Obama didnot say which one he favored but told an audience that includeddozens of financial leaders "both bills represent significantimprovement on the flawed rules we have in place today."
He portrayed his appearance at Cooper Union college, in lowerManhattan, as a reprise of a campaign speech he gave at the samelocation in March 2008 to offer an agenda for financial regulatoryreform.
"Since I last spoke here two years ago, our country has beenthrough a terrible trial," he said, pointing to the loss of morethan 8 million jobs, the losing of "countless small businesses,"trillions of dollars in lost savings and people forced to put offretirement or postpone college.
"I take no satisfaction in noting that my comments have largelybeen borne out by the events that followed," Obama said.
Obama said that today, the economy is recovering in what hecalled "the fastest turnaround in growth in nearly threedecades."
"But we have more work to do. Until this progress is felt notjust on Wall Street but Main Street we cannot be satisfied," headded.
Taking his argument for stronger oversight of the financialindustry to the city where the economic meltdown began, Obama saidit was "essential that we learn the lessons of this crisis, so wedon't doom ourselves to repeat it. And make no mistake, that isexactly what will happen if we allow this moment to pass."
Obama's speech was an effort to ramp up pressure on Congress forlegislation imposing new financial regulations.
He also used it to take the financial industry to task. "A freemarket was never meant to be a free license to take whatever youcan get, however you can get it," Obama said. "That is whathappened too often in the years leading up to the crisis. Some onWall Street forgot that behind every dollar traded or leveraged,there is a family looking to buy a house, pay for an education,open a business or save for retirement. What happens here has realconsequences across our country."
He called on the financial leaders to tone down what he called"furious efforts" by an army of lobbyists to derail or water downthe legislation. "I am sure that many of those lobbyists work forsome of you," he said.
The speech was given in a hall where Abraham Lincoln in February1860 spelled out his position on freedom and slavery ahead of thepresidential campaign that year. It also came just six days afterthe Securities and Exchange Commission's fraud case against thehuge investment bank Goldman Sachs.
Obama has denied any White House involvement in the timing ofthe SEC case, but the charges have emboldened Democrats in theircriticism of Republicans who oppose the administration's overhaulproposal - even though measures in the proposal may not havestopped the transactions involved in the Goldman case.
The sweeping regulation proposal represents the broadest attemptto overhaul the U.S. financial system since the 1930s, and aims toprevent another crisis. Democrats are preparing to bring the Senateversion of the bill up for debate, but solid GOP opposition hascomplicated the effort. Senate negotiators say they had madeprogress toward a compromise bill that could command support fromboth sides.
The legislation would create a mechanism for liquidating large,interconnected financial firms that are so big that their suddencollapse could shake the economy. At the height of the crisis in2008, the Bush administration and the Federal Reserve providedbillions of taxpayer dollars to prop up the giant insurer AmericanInternational Group Inc., several banks and various financialinstitutions considered too big to fail. The moves were highlyunpopular with voters.
The bills also, for the first time, would impose oversight onthe market for derivatives - complicated financial instrumentswhose value is derived from the value of other investments. Themeasures also would create a council to detect threats to thebroader financial system and establish a consumer protection agencyto police consumers' dealings with banks and other financialinstitutions.
Republicans contend that Democratic plans to create a $50billion fund, paid for by the industry, to help unwind failinginstitutions would encourage Wall Street banks to take risks and toexpect future bailouts. Democrats say the fund would lead tobankruptcy, not rescue. The administration does not support thefund and would not object to its being removed from the bill.
The Senate Agriculture Committee on Wednesday approved a bill byits chairwoman, Sen. Blanche Lincoln, D-Ark., to limit banks'ability to trade derivatives and to make such transactions moreopen. Lincoln's proposal is more sweeping than those offered by theObama administration and the House, but it is expected to becomepart of the Senate financial overhaul bill.
At the same time, Senate Banking Committee Chairman Chris Dodd,D-Conn., and Sen. Richard Shelby of Alabama, the panel's topRepublican, have been trying to negotiate a compromise measure thatcould win GOP support.
Democrats have accused Senate Republican leader Mitch McConnellof Kentucky of aiding efforts by the financial industry and othersto fend off the attempt to impose tighter regulation.
McConnell has raised concerns about the bill. But he also hassaid the measure can be fixed and he has pushed for the bipartisantalks to continue.
"Both sides have expressed a willingness to make the changesneeded to ensure without any doubt that this bill won't puttaxpayers on the hook for future bailouts of Wall Street banks,"McConnell said.
New York Mayor Michael Bloomberg - who has expressedreservations to the overhaul legislation - was in the audience ofapproximately 700 financial industry leaders, consumer advocates,presidential advisers, local officials, students, faculty andothers for Obama's speech.