Washington (CNN) - Congressional leaders from both parties met Wednesday with President Barack Obama to discuss proposals to reform the financial industry, but the talks failed to ease partisan divisions.
Obama welcomed the top officers of the House and Senate from both parties to the White House as the Senate prepares to consider its version of a bill intended to prevent another Wall Street collapse like the one that triggered the U.S. economic recession.
The House has passed its version of the financial regulatory reform bill, and the Senate is preparing to debate a Democratic proposal opposed so far by Republicans.
At the start of Wednesday's meeting, Obama said he wanted Congress to move quickly on passing a bipartisan financial regulatory reform package.
"We cannot have a circumstance in which a meltdown in the financial sector once again puts the economy in peril, Obama said, adding that an "unfettered market in which people are taking huge risks and expecting taxpayers to bail them out when things go sour is simply not acceptable."
Asked if the final legislation would bring a system of future bailouts of failing companies, similar to the government efforts to prop up financial corporations in 2008 and 2009, Obama said: "I am absolutely confident that the bill that emerges is going to be a bill that prevents bailouts. That's the
However, House and Senate leaders who attended the meeting showed no sign of compromise after it ended.
Senate Minority Leader Mitch McConnell, R-Kentucky, accused Democrats of pulling out of bipartisan negotiations to try to force through their proposal, which he said would institutionalize federal bailouts for struggling banks and corporations.
"That is clearly the wrong way to go," McConnell said.
Democrats responded that McConnell was untruthful on both counts.
"For them to say it's a bailout for financial institutions just defies credibility in any way," said House Speaker Nancy Pelosi, D-California, while Senate Majority Leader Harry Reid called the accusation of Democrats undermining bipartisan negotiations "a figment of (McConnell's) imagination."
Also attending the meeting were House Minority Leader John Boehner, R-Ohio, and House Majority Leader Steny Hoyer, D-Maryland, along with Vice President Joe Biden, Treasury Secretary Tim Geithner and Obama's chief of staff, Rahm Emanuel.
Obama and congressional Democrats hope the momentum of passing the health care bill earlier this year after a tortuous legislative struggle will help gain approval for another top priority - reforming the nation's financial
regulatory system in the aftermath of the recession.
The Senate bill would create a new consumer regulator that would be housed inside the Federal Reserve but considered independent. The regulator's mission would be to ensure consumers get a fair shake with mortgages and credit cards.
Republicans oppose the extensive rule-making and enforcement powers that the consumer regulator would have, saying they would threaten bank safety and soundness.
Another big area of disagreement involves ways to prevent future collapses of major corporations, such as that of American Insurance Group (AIG). The Senate bill seeks to force trading on complex financial products,
known as derivatives, to be better regulated. However, Republicans and Democrats disagree over the scope of such regulation.
Geithner told reporters after the meeting that Obama will insist that any bill from Congress ensure that any government support for future Wall Street failure comes from large financial institutions, rather than tax dollars. He said reform legislation would include a mechanism for putting failing companies out of business instead of bailing them out.
"When large companies manage themselves to a point where they cannot survive without help from the government, we put them out of business," Geithner said, later adding: "Any risks the government takes are going to be borne by the large financial institutions.
As the White House meeting began, Sen. Chris Dodd, D-Connecticut, who is leading the effort to pass the bill in the chamber, released the text of a statement he made in the Senate that said Republicans were using Wall Street talking points to oppose the bill that would change the status quo for big banks and corporations.
In particular, Dodd said the opposition strategy sought to link the bill to unpopular federal bailouts of big banks at the start of the recession, instead of focusing on how the proposal was intended to prevent a future crisis.
"It's a naked political strategy, and if it succeeds, and this legislation goes down, and another crisis sinks the American economy, then the next recession and all of the damage it will bring to middle class families will have happened for the sake of that false talking point," Dodd's prepared remarks said.
"It's straight from the Wall Street special interest playbook. And it's just a Wall Street lie," Dodd added in the prepared remarks. "This bill ends bailouts."
He cited strengthened regulatory powers to monitor risks to the financial system, as well as stronger standards on Wall Street firms to prevent those risks.
"Cracking down on the biggest players is critical to ending bailouts," Dodd said, according to the prepared text.
"Our bill imposes tougher standards on large, risky Wall Street firms," Dodd said. "It eliminates the federal government's capacity to bail out individual companies. And it requires that financial firms write their own shutdown plans and then pay for the liquidation process if it's needed."
The Obama administration and Democratic National Committee are trying to generate public support for the measure.
A DNC advertisement airing on cable networks, including CNN, criticizes Republicans for not joining the Obama administration's push for regulatory overhaul. In addition, Geithner touted Wall Street reform in an op-ed piece published Tuesday by the Washington Post.
"We cannot build a system that depends on the wisdom and judgment of future regulators," Geithner's article said. "Even the smartest individuals armed with the sharpest tools will not be able to find every weakness and
preempt every crisis. Instead, the best strategy for stability is to force the financial system to operate with clear rules that set unambiguous limits on leverage and risk."
With congressional mid-term elections coming up in November, Democrats want to pass a financial regulatory bill as soon as possible to avoid the issue getting caught up in the campaign process.
Updated: 3:47 p.m.