Associated Press
NEW YORK -- Lecturing Wall Street on its own turf, President Obama warned financial leaders not to use the recovering economy to race back into "reckless behavior" that could cause a new meltdown. He declared that a bailout-weary public will not break their fall again.
Obama insisted Monday that there is an urgent need for tighter financial regulation, and he cautioned his audience not to try to block it. He spoke on the first anniversary of the collapse of the Lehman Brothers investment bank, the largest bankruptcy in U.S. history and a stark reminder of the financial crisis that spread into a deep recession despite huge federal bailouts of major companies.
"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," Obama said in a stern bid to boost his regulation proposals.
The president's speech reflected public sentiment that taxpayers were immeasurably harmed from last year's financial collapse -- and that, barring change, it could happen again. As investment giants return to profit, millions of Americans are still coping with unemployment, home foreclosures and retirement portfolios that got washed away in the storm.
For symbolic emphasis, Obama spoke from venerable Federal Hall on Wall Street.
"Unfortunately, there are some in the financial industry who are misreading this moment," Obama told a quiet audience of leaders from the investment sector. "We will not go back to the days of reckless behavior and unchecked excess that was at the heart of this crisis. ... Those on Wall Street cannot resume taking risks without regard for consequences."
Afterward, he joined former President Bill Clinton for lunch at a New York restaurant. The White House announced Obama would address the annual meeting of the Clinton Global Initiative Sept. 22.
A year after the meltdown, seven of 10 Americans lack confidence that the federal government has taken safeguards to prevent another financial industry meltdown, according to a new AP-GfK poll.
Yet Obama's reach goes only so far; his bid for huge regulatory change is up to Congress.
The plan is being fought by a determined financial services lobby with a major assist from big business groups, and infighting among regulators who oversee the various portions of the sprawling financial architecture has further slowed the process.
Republican Sen. Judd Gregg of New Hampshire was among GOP lawmakers who responded to the president's message with caution.
He said, "We must be wary of the reality that -- in an attempt to address yesterday's failures -- Congress will put in place regulatory schemes which will fundamentally undermine risk taking."
Obama has sought tougher capital requirements for banks, arguing that banks' buying of exotic financial products without keeping enough cash in reserve was a key cause of the crisis. He wants more openness for the markets in which banks trade the most complex products.
Obama's plan also would give the Federal Reserve new oversight powers and impose conditions designed to discourage companies from getting too big. And he proposes a consumer protection agency to make rules for financial products, so people know what they're buying.
AP writers Anne Flaherty and Julie Hirschfeld Davis contributed to this story.
