US President Barack Obama condemned Wall Street today for risk-taking that led to the financial crisis and urged the banking industry to stop its "furious efforts" to block tighter regulations.
In a speech in New York attended by several Wall Street executives, Mr Obama blamed the financial meltdown and the recession that followed on a "failure of responsibility" by both Washington and Wall Street.
He warned that the country faced a repeat of the crisis without new rules to rein in the financial industry in a speech that tapped into public fury at big banks and pushed a Democratic regulatory reform bill that is gaining traction in the US Senate.
"A free market was never meant to be a free license to take whatever you can get, however you can get it," Mr Obama said.
"One of the most significant contributors to this recession was a financial crisis as dire as any we've known in generations," he added.
"And that crisis was born of a failure of responsibility - from Wall Street to Washington - that brought down many of the world's largest financial firms and nearly dragged our economy into a second Great Depression." He said the legislation would significantly improve the current flawed regulatory structure, "despite the furious efforts of industry lobbyists" to try to weaken the proposals.
Mr Obama, who has in the past referred to Wall Street executives as "fat cats," said some of the huge pay packages in the industry encouraged "perverse incentives to take reckless risks," although he added that he does not begrudge anyone success "when that success is earned."
Mr Obama spoke at the historic Great Hall at Cooper Union college in Manhattan, the venue for several important addresses by leading Americans, including Abraham Lincoln who argued there against the expansion of slavery in a speech that helped assure his 1860 presidential victory.
Cooper Union was also the site of a speech Mr Obama gave on financial reform during the 2008 presidential election campaign. Democrats hope cracking down on Wall Street will help them win voter support at congressional elections in November.
One of Mr Obama's aims in the speech was to put pressure on Republicans to support reform legislation amid signs several in the opposition party may be willing to back the bill.
The legislation got a boost from fraud charges brought against Wall Street powerhouse Goldman Sachs last week and Treasury Secretary Timothy Geithner said he was "absolutely confident" that the reforms will happen.
"If you just listen to the tone of the last couple of days, it's changed. I spent a huge amount of time with Republicans over the last few weeks ... and I think they really want to be for this," he said in an interview on CBS's The Early Show.
Mr Obama addressed an audience of about 700 people, including financial industry leaders, members of the president's Economic Recovery Advisory Board, local officials and Cooper Union students and faculty.
Goldman Sachs chief executive Lloyd Blankfein was expected to attend the speech along with Gary Cohn, the bank's president and chief operating officer, a source familiar with the matter said.
The White House has signaled increasing optimism about garnering Republican support to approve financial regulation legislation in Congress and is targeting moderate Republican senators, including Scott Brown of Massachusetts and Susan Collins and Olympia Snowe of Maine.
Several Republicans have taken aim in particular at the mechanism for winding down failing financial institutions, saying it would lead to perpetual bailouts of Wall Street. The White House says that is not true.
House of Representatives Republican leader John Boehner, in an opinion piece in Investors Business Daily, labeled the measure a "job-killing initiative" and said it "would provide the nation's largest financial firms with permanent bailouts."
He said Mr Obama "talks a big game when it comes to Wall Street" but was promoting steps that "benefit the likes of Goldman Sachs."
The financial reform bill authored by US senate's banking committee chairman Christopher Dodd would bring new oversight to hedge funds and derivatives while cracking down on risky bank trading and putting in place protections for consumers of financial products. It might be voted in the Senate next week.
It would also establish a system for unwinding troubled financial companies to prevent a repeat of catastrophes such as the collapse of Lehman Brothers in 2008 and the near-failure of insurance giant AIG.
Mr Obama listed five essential elements to the reform legislation in his speech. Those include the "Volcker Rule," which would ban banks from engaging in proprietary trading, or trading for their own account. It is named after former Federal Reserve Chairman Paul Volcker, an outside adviser to Mr Obama.
Mr Obama also wants to see a system for winding down large firms whose failure could disrupt markets, transparency for derivatives, strong consumer protections and a provision giving shareholders more say on executive pay.
Democrats hold a 59-41 vote majority over Republicans in the Senate - one vote short of the number needed to overcome procedural hurdles to the bill's passage. Mr Obama therefore needs at least one Republican vote.
Reuters