News / USA

Obama to Use New York Speech to Press for Financial Reform

In a speech in New York City on Thursday, President Barack Obama will again press his case for the U.S. Congress to approve a sweeping financial system reform bill.  The president's return to The Cooper Union college in New York to deliver an urgent message about the need to strengthen financial rules comes as the U.S. Senate prepares for what could be a difficult debate on the legislation.

This will be the fourth address Barack Obama has delivered in New York City, the home of Wall Street, since 2007 when as a candidate for the White House he called for greater accountability, intensified financial oversight, and other steps.

This time, nearing the second anniversary of the U.S. financial crisis, the stakes are higher, with the president and Democrats controlling Congress on the verge of possibly winning approval of the most significant reforms since steps taken following the Great Depression of the 1930s.

Last year, speaking in New York on the first anniversary of the financial crisis, as the U.S. House of Representatives moved toward passing its own version of financial reform, the president delivered this message at New York City's Federal Hall:

"Those on Wall Street cannot resume taking risks without regard to consequences and expect that next time American taxpayers will be there to break their fall," said President Obama.

Leading up to Thursday's speech, President Obama and administration officials, notably Treasury Secretary Timothy Geithner, have stressed what they call the critical nature of the decisions facing Congress.

"This is going to be the most sweeping set of reforms we have contemplated as a country since those put in place after the Great Depression," said Timothy Geithner. "We let a system designed for a different era fall way behind the curve of risk and innovation in those markets, we never should have let that happen."

The reform bill in the Senate would impose new controls on banks and other institutions aimed at greater transparency and protecting consumers, along with steps to ensure that failures of large institutions do not bring the economy down again.

Referring to what he called clear choices facing Congress and Americans, Vice President Joe Biden referred to an overriding imperative of reform.

"The need to restore trust and credibility in America's financial markets," said Vice President Biden. "Too many market participants themselves, through short-sighted reed have squandered that credibility and I would argue to their own detriment long-term.  Wall Street reform must put a stop to this."

Minority Republicans, who the president has been courting to support the legislation, have asserted that it would amount to authorizing ongoing government bailouts for banks.

On the eve of the president's latest address in New York, administration officials and Democratic congressional leaders voiced hope that Republicans will come on board, as both sides continued negotiations.

Key Senate Republicans voiced optimism on Wednesday that differences could be resolved so a final bill can be called bipartisan.  Senator Richard Shelby responded to criticisms that Republicans, in pushing for changes on key provisions, have somehow been on the wrong side of the financial reform debate:

"I don't think we have ever been on the wrong side of the fence in trying to get a substantive bill that affects the whole economy of the United States of America and the future of job creation," said Senator Shelby.

Senate Banking Committee chairman Democrat Christopher Dodd described what he called the big picture people all involved should keep in mind:

"Whose side are you on?  What more do you need to know?  What has occurred as a result of the near melt-down of the financial system in this country, eight and a half millions jobs, seven million homes, retirement, small business, credit has seized up in the country, we came to the brink of a financial collapse," said Senator Dodd. "What more do you need to know?"

As the Senate prepares to debate financial reform, the administration also criticized what Vice President Biden referred to this week as powerful political lobbying and cynical tactics by opponents of reform.

Wall Street lobbying was the focus of remarks by Vermont Independent Senator Bernie Sanders who urged his colleagues to stand up for the needs of ordinary Americans against big money interests.

"The issue that we are debating now is not whether Congress will regulate Wall Street, it is whether or not Congress will continue to be regulated by Wall Street," said Senator Sanders.

The president's speech also takes place against the background of the Securities and Exchange Commission lawsuit against Wall Street firm Goldman Sachs, which the government alleges defrauded investors by selling risky mortgage instruments without informing buyers they were assessed as likely to fail.

Anger in Congress over this issue is intense among Democrats and Republicans.  Republican Congressman Cliff Stearns believes Goldman Sachs, which received billions in financial system bailout funds, should offer Americans reparations, and the government should do all it can to probe other instances of alleged wrongdoing.

"The SEC also has a duty to American taxpayers to get to the bottom of this and continue to investigate any abusive practice employed by all financial institutions, not just Goldman Sachs," said Cliff Stearns.

President Obama and administration officials have strongly denied suggestions the White House knew in advance of the SEC lawsuit against Goldman Sachs.

White House spokesman Robert Gibbs dismissed suggestions that the administration would be concerned that the focus on Goldman Sachs, a key contributor to Democrats as well as Republicans, could carry a price of reduced political contributions in the future.

On the eve of his Thursday address at The Cooper Union college, just a short distance from Wall Street, the president reiterated in a CNBC television interview, that he has been calling for financial reform for years.   

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