March 20th, 2010
09:40 AM ET
5 years ago

Obama addresses financial reform

(CNN) - President Obama addressed financial reform in his weekly radio and Internet address Saturday, saying, "We need common-sense rules that will our allow markets to function fairly and freely while reining in the worst practices of the financial industry."

"After months of bipartisan work, Senator Chris Dodd and his committee have offered a strong foundation for reform, in line with the proposal I previously laid out, and in line with the reform bill passed by the House," Obama also said in the address. "It would provide greater scrutiny of large financial firms to prevent any one company from threatening the entire financial system – and it would update the rules so that complicated financial products like derivatives are no longer bought and sold without oversight.

"It would prevent banks from engaging in risky dealings through their own hedge funds – while finally giving shareholders a say on executive salaries and bonuses. And through new tools to break up failing financial firms, it would help ensure that taxpayers are never again forced to bail out a big bank because it is 'too big to fail,'" he continued.

Full transcript of the address after the jump

Remarks of President Barack Obama
As Prepared for Delivery
Weekly Address
March 20, 2010

On Monday, the Banking Committee of the United States Senate will debate a proposal to address the abuse and excess that led to the worst financial crisis in generations. These reforms are essential. As I’ve urged over the past year, we need common-sense rules that will our allow markets to function fairly and freely while reining in the worst practices of the financial industry. That’s the central lesson of this crisis. And we fail to heed that lesson at our peril.

Of course, there were many causes of the economic turmoil that ripped through our country over the past two years. But it was a crisis that began in our financial system. Large banks engaged in reckless financial speculation without regard for the consequences – and without tough oversight. Financial firms invented and sold complicated financial products to escape scrutiny and conceal enormous risks. And there were some who engaged in the rampant exploitation of consumers to turn a quick profit no matter who was hurt in the process.

Now, I have long been a vigorous defender of free markets. And I believe we need a strong and vibrant financial sector so that businesses can get loans; families can afford mortgages; entrepreneurs can find the capital to start a new company, sell a new product, offer a new service. But what we have seen over the past two years is that without reasonable and clear rules to check abuse and protect families, markets don’t function freely. In fact, it was just the opposite. In the absence of such rules, our financial markets spun out of control, credit markets froze, and our economy nearly plummeted into a second Great Depression.

That’s why financial reform is so necessary. And after months of bipartisan work, Senator Chris Dodd and his committee have offered a strong foundation for reform, in line with the proposal I previously laid out, and in line with the reform bill passed by the House.

It would provide greater scrutiny of large financial firms to prevent any one company from threatening the entire financial system – and it would update the rules so that complicated financial products like derivatives are no longer bought and sold without oversight. It would prevent banks from engaging in risky dealings through their own hedge funds – while finally giving shareholders a say on executive salaries and bonuses. And through new tools to break up failing financial firms, it would help ensure that taxpayers are never again forced to bail out a big bank because it is “too big to fail.”

Finally, these reforms include a new Consumer Financial Protection Agency to prevent predatory loan practices and other abuses to ensure that consumers get clear information about loans and other financial products before they sign on the dotted line. Because this financial crisis wasn’t just the result of decisions made by large financial firms; it was also the result of decisions made by ordinary Americans to open credit cards and take on mortgages. And while there were many who took out loans they knew they couldn’t afford, there were also millions of people who signed contracts they didn’t fully understand offered by lenders who didn’t always tell the truth.

This is in part because the job of protecting consumers is spread across seven different federal agencies, none of which has the interests of ordinary Americans as its principal concern. This diffusion of responsibility has made it easier for credit card companies to lure customers with attractive offers then punish them in the fine print; for payday lenders and others who charge outrageous interest to operate without much oversight; and for mortgage brokers to entice homebuyers with low initial rates only to trap them with ballooning payments down the line.

For these banking reforms to be complete – for these reforms to meet the measure of the crisis we’ve just been through – we need a consumer agency to advocate for ordinary Americans and help enforce the rules that protect them. That’s why I won’t accept any attempts to undermine the independence of this agency. And I won’t accept efforts to create loopholes for the most egregious abusers of consumers, from payday lenders to auto finance companies to credit card companies.

Unsurprisingly, this proposal has been a source of contention with financial firms who like things just the way they are. In fact, the Republican leader in the House reportedly met with a top executive of one of America’s largest banks and made thwarting reform a key part of his party’s pitch for campaign contributions. And this week, the allies of banks and consumer finance companies launched a multimillion dollar ad campaign to fight against the proposal. You might call this ‘air support’ for the army of lobbyists already arm twisting members of the committee to reject these reforms and block this consumer agency. Perhaps that’s why, after months of working with Democrats, Republicans walked away from this proposal. I regret that and urge them to reconsider.

The fact is, it’s now been well over a year since the near collapse of the entire financial system – a crisis that helped wipe out more than 8 million jobs and that continues to exact a terrible toll throughout our economy. Yet today the very same system that allowed this turmoil remains in place. No one disputes that. No one denies that reform is needed. So the question we have to answer is very simple: will we learn from this crisis, or will we condemn ourselves to repeat it? That’s what’s at stake.

I urge those in the Senate who support these reforms to remain strong, to resist the pressure from those who would preserve the status quo, to stand up for their constituents and our country. And I promise to use every tool at my disposal to see these reforms enacted: to ensure that the bill I sign into law reflects not the special interests of Wall Street, but the best interests of the American people.

Thank you.

</blockquote


Filed under: President Obama
soundoff (19 Responses)
  1. Albert R. K. . L.A., CA

    He said, “reining in the worst practices of the financial industry." For a racehorse to be the best on the track it needs a rider on its back who knows when to pull the reins in and when to let it out. What a difference from The “Get government off of our backs” line we got from Reagan. Under his plan the government put on the blinders and looked the other way promising if we feed a horse (Rich) enough oats (tax-cuts) that some are bound to make it through to the high end and then trickle-down onto the path for the hungry sparrows (Reaganomics = ‘Horse-and-sparrow economics”) which would create jobs for us all. Well, it sure did leave a big pile to have to clean up.

    March 20, 2010 10:12 am at 10:12 am |
  2. Dan

    Please give us all a break.
    Sen. Dodd looking after finance reform after his own shady dealings.??
    It is high time we got rid off corrupt politicians and do no longer tolerate their unethical behavior.

    March 20, 2010 10:23 am at 10:23 am |
  3. Independent One

    Obama is the hardest working President I've seen EVER

    March 20, 2010 10:34 am at 10:34 am |
  4. DW

    The most shocking piece of information that came out of the recent news of Lehman Bros. shady financial tricks is not that what some of what they did may have been illegal. Rather it is that so much of their financial shenanigans were perfectly legal. If any of us tried those kind of flim-flams with our bookkeeping, we'd be thrown in jail. Yet in corporate circles it is both common and acceptable.

    Now Democrats are trying to put in safeguards to put an end to those kind of abuses – along with trying to prevent another financial meltdown. So what do the Republicans do? They start screaming and yelling about "Big Government", "Over Regulation", "Stifling the Free Market", and – of course, their recent favorite – "Socailism!"

    March 20, 2010 10:36 am at 10:36 am |
  5. Jim

    How much is this going to cost the tax payer? We are likely to have an enormouse healthcare bill to pay for; Obama wants to give billions to teacher unions under the guise of reforming the scholls and billions in child tax credits sort of an encouragement for people of public assistance to have more kids for the tax payer to support. So please be up front, how much is this going to cost us?

    March 20, 2010 10:41 am at 10:41 am |
  6. MsDp

    This is why I am a proud American Citizen and proud of my leader. It's call multi-tasker and forward thinking. America, we really need to get forward thinking people in congress who have the interest of American people, so America can catch up with the other countries and move pass all countries and become LEADERS again. It is time, wake up America! Let's go! We cannot afford to go backward, we must go forward, because we are a progressive nation and we are not afraid.

    March 20, 2010 10:52 am at 10:52 am |
  7. Kevin in Ohio

    Yep.... on to the NEXT one-sixth of our economy. Heck, maybe the WHOLE THING. Government knows best! And they are sooooooo efficient.

    March 20, 2010 11:11 am at 11:11 am |
  8. Slider

    Jive Turkey in Chief is looking in the wrong place.

    The place where financial reform needs to take place is in Washington.

    It's why you were voted in office.

    Another lie.

    March 20, 2010 11:12 am at 11:12 am |
  9. dan smith

    Putting Chris Dodd in charge of financial reform is like letting the fox guard the chicken coup.

    March 20, 2010 11:31 am at 11:31 am |
  10. Kat

    Financial Reform.. from THIS administration??? This is really a joke.
    Reform is NOT just SPEND, and that's all this guy knows how to do.

    March 20, 2010 12:01 pm at 12:01 pm |
  11. Henry Miller, Libertarian, Cary, NC

    Why do we need financial "reform?" Once this socialist moron gets through taxing us all into poverty and ruining the American economy, there won't be any "finance" left to "reform."

    March 20, 2010 12:20 pm at 12:20 pm |
  12. Larry

    The lies continue . . . the only reform needed is stopping the goverment from hurting the economy.

    March 20, 2010 12:21 pm at 12:21 pm |
  13. Rick McDaniel

    Yes, financial reform is very much needed. Whether Dodd has a workable plan or not, is yet to be determined.

    Based on the Dems version of health care reform, I would take a skeptical view of any proposals they make, until the details are carefully examined. they do NOT do their homework very well.

    March 20, 2010 12:30 pm at 12:30 pm |
  14. Willy Brown

    Great another tax and spend idea from Barry

    March 20, 2010 12:39 pm at 12:39 pm |
  15. Ancient Texan

    Since Chris Dodd and his buddy, Barney Franks, are the two responsible for bringing the United States economy to it's knees, with their handling of Frannie Mae and Freddie Mac and the loans to unemployed and unqualified people to buy homes they couldn't afford, putting the same foxes in charge of rebuilding the system is rank stupidity. But it fits the rest of the progressive agenda, so Obama is all for it.

    March 20, 2010 01:09 pm at 1:09 pm |
  16. ThinkAgain

    Like naughty children who insist on doing hurtful things, the financial industry has proven beyond a shadow of a doubt that it needs meaningful, common sense regulations – backed up by substantial penalties – to keep it in line.

    If they don't want to be regulated, they shouldn't have been so reckless with our money in the first place.

    I, for one, am not working my fanny off to provide money to financial fat cats to play with.

    March 20, 2010 01:11 pm at 1:11 pm |
  17. Jim

    Here we go again. The Repugs are already lining up to fight this. Are we going to have another year of arguing over this? How will they get the Tea Party to defend the banks. That would be interesting, but it's getting boring already. I can't wait for November to give the Dems a bigger majority and maybe we can finally get something done.

    March 20, 2010 01:14 pm at 1:14 pm |
  18. Preston kathy

    Do the rupubls know the word working toghther and progress or are they to lazz to look it up

    March 20, 2010 01:24 pm at 1:24 pm |
  19. annie against biased news

    I doubt if there is one person in the USA who thinks we do not need health care reform. BUT the majority of WE THE PEOPLE do NOT want government rationed health care or government takeover of another one of our freedoms!

    March 20, 2010 02:20 pm at 2:20 pm |