U.S. President Barack Obama is pushing for new regulations on the American financial services sector, warning industry leaders there can be no return to the abuses of the past. The president made the case for reform in a speech in the heart of New York's financial sector - one year to the day after the giant investment banking firm Lehman Brothers filed for bankruptcy.
The collapse of Lehman Brothers was a turning point for Wall Street - a sign the financial services industry was in deep trouble. The government stepped in, using billions of taxpayer dollars to help banks, investment firms, and even major insurers weather the storm.
President Obama says an expensive lesson was learned. "We will not go back to the days of reckless behavior and unchecked excess that was at the heart of this crisis, where too many were motivated only by the appetite for quick kills and bloated bonuses. Those on Wall Street cannot resume taking risks without regard for consequences, and expect that next time, American taxpayers will be there to break their fall," he said.
In a speech to leaders of the financial community in the historic Wall Street building where George Washington was inaugurated as the nation's first president, Mr. Obama spoke of the need for new regulations and industry responsibility. He said the financial sector is returning to normalcy, but warned normalcy must not lead to complacency.
"The old ways that led to this crisis cannot stand. And to the extent that some have so readily returned to them underscores the need for change and change now,” said the president. “History cannot be allowed to repeat itself."
The president said his administration wants to work with the financial industry to come up with new rules. He said they must include strong protections for consumers, and greater accountability for large financial firms.
He also spoke once again about the need to reform the global financial system, saying the issue will be on the agenda next week when he hosts the Group of 20 economic summit in Pittsburgh, Pennsylvania. "As the United States is aggressively reforming our regulatory system, we are going to be working to ensure the rest of the world does the same."
Most of the steps he outlined were first proposed months ago. But with health care dominating debate in Congress, the White House wanted to use the first anniversary of the collapse of Lehman Brothers to draw renewed attention to the need for financial reform.
The speech also provided the president with an opportunity to speak publicly about the controversy surrounding his decision to impose tariffs on Chinese-made tires. Mr. Obama said he remains committed to expanding trade, but he said America must enforce its trade agreements. "So when, as happened this weekend, we invoke provisions of existing agreements, we do so not to be provocative or to promote self-defeating protectionism. We do so because enforcing trade agreements is part and parcel of maintaining an open and free trading system," the president explained.
The White House says China agreed when it joined the World Trade Organization to allow its trading partners to take actions to counter surges of imported goods.