Obama tries a 'do-the-right-thing' approach with bankers
President Obama went to the den of the money changers today to make his case for financial-system reform.
His speech on Wall Street was largely a lecture, but I thought the tone was much less confrontational than it might have been. Anyone hoping for more overt banker-bashing will probably be disappointed.
Yes, Obama took the requisite swing at excessive risk-taking and fat compensation packages, telling his audience of financial company executives and consumer advocates that "we will not go back to the days of reckless behavior and unchecked excess at the heart of this crisis, where too many were motivated only by the appetite for quick kills and bloated bonuses."
Also requisite when you’re in the beating heart of capitalism: Profess one’s faith in "the power of the free market."
Jobs, Obama said, "are best created not by government, but by businesses and entrepreneurs willing to take a risk on a good idea. I believe that the role of government is not to disparage wealth, but to expand its reach; not to stifle markets, but to provide the ground rules and level playing field that helps to make them more vibrant -- and that will allow us to better tap the creative and innovative potential of our people."
As for the administration’s multipronged effort at reforming the financial industry and how it’s regulated, here’s how Obama argued against keeping the status quo:
"I certainly did not run for president to bail out banks or intervene in the capital markets. But it is important to note that the very absence of common-sense regulations able to keep up with a fast-paced financial sector is what created the need for that extraordinary intervention. The lack of sensible rules of the road, so often opposed by those who claim to speak for the free market, led to a rescue far more intrusive than anything any of us, Democrat or Republican, progressive or conservative, would have proposed or predicted."
Then he tried a bit of guilt-mongering in an attempt to get financiers to do the right thing without having the government force them down that road:
"The fact is, many of the firms that are now returning to prosperity owe a debt to the American people. Though they were not the cause of the crisis, American taxpayers through their government took extraordinary action to stabilize the financial industry. They shouldered the burden of the bailout and they are still bearing the burden of the fallout -- in lost jobs, lost homes and lost opportunities. It is neither right nor responsible after you’ve recovered with the help of your government to shirk your obligation to the goal of wider recovery, a more stable system, and a more broadly shared prosperity.
"So I want to urge you to demonstrate that you take this obligation to heart. To put greater effort into helping families who need their mortgages modified under my administration’s homeownership plan. To help small business owners who desperately need loans and who are bearing the brunt of the decline in available credit. To help communities that would benefit from the financing you could provide, or the community development institutions you could support. To come up with creative approaches to improve financial education and to bring banking to those who live and work entirely outside the banking system. And, of course, to embrace serious financial reform, not fight it."
Among those in the audience at Federal Hall on Wall Street today: Citigroup Chairman Dick Parsons; Robert S. Nichols, president of the Financial Services Forum; Jim Chanos, president of well-known "short seller" Kynikos Associates; Wes Edens, chief executive of private-equity firm Fortress Investments; and Robert S. Kapito, president of money management giant BlackRock Inc.
-- Tom Petruno
Photo: President Obama at Federal Hall in New York today. Credit: Peter Foley / European Pressphoto Agency