Thread: Obama's warning to bankers

http://news.bbc.co.uk/2/hi/business/8255603.stm

US President Barack Obama has warned bankers against complacency, saying that some in the industry are ignoring the lessons of the financial crisis.

"We will not go back to the days of reckless behaviour and unchecked excess at the heart of this crisis," he said.

He called on Wall Street to support "the most ambitious overhaul of the financial system since the Great Depression".

The financial system was returning to normal but had not recovered, he added.

"There are some in the financial industry who are misreading this moment," said President Obama in a speech to mark one year since the collapse of Lehman Brothers bank.

"Instead of learning the lessons of Lehman and the crisis from which we are still recovering, they are choosing to ignore them. They do so not just at their own peril, but at our nation's."

He told Wall Street that it could not resume taking risks without regard for consequences and said they should not expect US taxpayers to bail them out again.

The speech came as UK Prime Minister Gordon Brown said that he was "appalled" that some financial firms had been continuing or even extending their bonus culture.

In a BBC interview, Mr Brown said he was determined that world leaders meeting in Pittsburgh next week would "complete the unfinished business" of cleaning up banks - including establishing rules on bonuses.

New powers

President Obama said his administration was working on an "ambitious" overhaul of the regulatory system.

Under the proposed regulation, the White House would give the central bank, the Federal Reserve, new powers over huge financial firms and the ability to seize banks whose collapse could threaten the economy.

He also wants a new watchdog, the Consumer Financial Protection Agency, to oversee products such as mortgages, car loans and credit cards. The Federal Trade Commission would also be given new powers to protect consumers.

"It is incumbent on us to put in place those reforms that will prevent this crisis from ever happening again," President Obama said.

The proposals have faced opposition from the banking industry and been tied up in Congress, which has been bogged down with the administration's healthcare reform proposals.

Storms breaking

Mr Obama said that his recovery was bearing fruit and had "prevented layoffs of tens of thousands of teachers, police officers and other essential public servants".

"Although I will never be satisfied while people are out of work and our financial system is weakened, we can be confident that the storms of the past two years are beginning to break," he added.

He denied that his plans to force greater transparency in financial products would lead to a reduction in competition.

He said that in the past competition had been about who could hide the true costs of their products the best by offering teaser rates on credit cards and mortgages.

"By setting ground rules, we'll increase the kind of competition that actually provides people better and greater choices, as companies compete to offer the best product, not the one that's most complex or confusing," he said.

(these links and quotes come from the BBC page)
http://www.huffingtonpost.com/robert..._b_285578.html

Originally Posted by Robert Reich

The President is trying to breathe new life into financial reform. He's using the anniversary of the death of Lehman Brothers and the near-death experience of the rest of the Street, culminating with a $600bn taxpayer-financed bailout, to summon the political will for change. Yet the prospects seem dubious. As with healthcare reform, he has stood on the sidelines for months and allowed vested interests to frame the debate. Nor has he come up with a sufficiently bold or coherent set of reforms likely to change the way the Street does business, even if enacted.

http://www.economicpolicyjournal.com...from-wall.html

Originally Posted by Robert Wenzel

It's getting to the point where it makes little sense to listen to the President speak. He speaks in broad generalities about laws and regulations he wants to enact. Often the generalities are such that they are difficult to argue with in the manner he presents them. For example, he says he wants to protect against future crises, like the kind we have now. Well yeah, who wouldn't? But the devil is in the details, which the president never discusses.

there more on their if you wanna check them out


Let the bashing, counterbashing begin.

On the surface I like the idea of protecting consumers from predatory practices. Who could argue that is bad?

Letting the fed seize faltering banks stresses me out a little...the whole idea of "Central Banks" seems a little to Soviet for my taste, but until Ron Paul is elected, the Fed is here to stay.

If anyone really wanted the excesses to stop, they would have let capitalism take its course and let these institutions and people fail.
You cannot cut a fresh set of bonus checks when you are not making a profit and there are no government bailout checks on the way.

Originally Posted by Gumby

If anyone really wanted the excesses to stop, they would have let capitalism take its course and let these institutions and people fail.
You cannot cut a fresh set of bonus checks when you are not making a profit and there are no government bailout checks on the way.

Yeah, Capitalism, to a great extent, can regulate or correct itself in the purest sense. There need to be regulatory laws but bad companies with bad habits who are bailed out will act the same way most college kids do these days...let the account go negative, call mom and dad, get some funds transfered with - maybe a weak lecture and no consequences, and repeat the pattern.

VERY lame.