President Barack Obama today said the financial storms of the last two years "are beginning to break" during a major speech in New York.
In a speech on the anniversary of Lehman Brothers' collapse, Mr Obama warned there was still a need for government help to stabilise the financial system - although that need "is waning".
Mr Obama also used his wide-ranging economic address to call on Wall Street firms to take responsibility and avoid reckless behaviour.
He urged financial firms not to fight regulatory reform and called on Congress to pass his proposals by the end of the year.
The president said while the economy and the financial system were showing signs of recovery, he wanted to emphasise that "normalcy cannot lead to complacency."
"Unfortunately, there are some in the financial industry who are misreading this moment. Instead of learning the lessons of Lehman and the crisis from which we are still recovering, they are choosing to ignore them," Mr Obama said at the historic Federal Hall in the heart of Wall Street.
"So I want them to hear my words: We will not go back to the days of reckless behaviour and unchecked excess at the heart of this crisis."
Mr Obama's speech also sought to show other countries his administration is serious about tackling weaknesses and excesses in the US financial system blamed for setting off the global crisis after Lehman, a venerable investment bank, filed for bankruptcy on September 15th, 2008.
He said financial institutions need to rebuild trust and not wait for new legislation to take action.
"You don't have to wait to use plain language in your dealings with consumers," Mr Obama said. "You don't have to wait for legislation to put the 2009 bonuses of your senior executives up for a shareholder vote. You don't have to wait for a law to overhaul your pay system so that folks are rewarded for long-term performance instead of short-term gains."
The president also defended his call for the creation of a consumer financial protection agency to regulate financial products such as mortgages and credit cards. The banking industry and Republicans have said such an agency would limit consumer choice and access to credit.
"Nothing could be further from the truth," Mr Obama said. "The lack of clear rules in the past meant we had the wrong kind of innovation."
The president said the administration will work with the financial industry to develop new rules and regulations that will "promote transparency and accountability" without stifling growth and innovation.
"But the old ways that led to this crisis cannot stand," he said. "And to the extent that some have so readily returned to them underscores the need for change and change now," he said.
Financial reform will be a key issue at a G20 summit of leading developed and developing nations in Pittsburgh next week but progress on Mr Obama's agenda has been slow.
The president and other backers of a financial reform say new rules are crucial to heading off another catastrophe. But many of the provisions are bogged down in Congress, possibly delaying reforms until 2010 or resulting in a watered-down package.
The Treasury Department said on Monday the US financial system remains fragile and that withdrawing stimulus measures must be done carefully to avoid disrupting a nascent recovery.
Mr Obama said: "While there continues to be a need for government involvement to stabilise the financial system, that necessity is waning."
Treasury Secretary Timothy Geithner said it was vital for Congress to approve a regulatory overhaul by the end of the year.
Gaps in the regulation of US banks and capital markets have been blamed for the sub-prime mortgage crisis and global financial chaos triggered after Lehman filed for bankruptcy on September 15th, 2008.
Reuters