Originally Posted By mawnck I hate to get my hopes up after the health care thing, but President O is finally speaking my language again. And I'm a-puttin' the whole thing here, so there. It's the President's speech after all. >>Good morning, everybody. I just had a very productive meeting with two members of my Economic Recovery Advisory Board: Paul Volcker, who is the former chair of the Federal Reserve Board, and Bill Donaldson, previously the head of the SEC. And I deeply appreciate the counsel of these two leaders and the board, that they’ve offered as we have dealt with a broad array of very difficult economic challenges Now over the past two years more than 7 million Americans have lost their jobs in the deepest recession our country has known in generations. Rarely does a day go by that I don’t hear from folks who are hurting. And every day we are working to put our economy back on track and put America back to work. But even as we dig our way out of this deep hole, it’s important that we not lose sight of what led us into this mess in the first place. This economic crisis began as a financial crisis when banks and financial institutions took huge, reckless risks in pursuit of quick profits and massive bonuses. When the dust settled and this binge of irresponsibility was over, several of the world’s oldest and largest financial institutions had collapsed or were on the verge of doing so. Markets plummeted, credit dried up, and jobs were vanishing by hundreds of thousands each month. We were on the precipice — precipice of a second Great Depression. And to avoid this calamity, the American people, who were already struggling in their own right, were forced to rescue financial firms facing crisis largely of their own creation. And that rescue, undertaken by the previous administration, was deeply offensive, but it was a necessary thing to do, and it succeeded in stabilizing financial systems and helping to avert that depression. Since that time, over the past year, my administration has recovered most of what the federal government provided the banks. And last week I proposed a fee to be paid by the largest financial firms in order to recover every last dime. But that’s not all we have to do. We have to enact common-sense reforms that will protect American taxpayers and the American economy from future crises as well. For while the financial system is far stronger today than it was one year ago, it’s still operating under the same rules that led to its near collapse. These are rules that allowed firms to act contrary to the interests of customers, to conceal their exposure to debt through complex financial dealings, to benefit from taxpayer-insured deposits while making speculative investments, and to take on risks so vast that they posed threats to the entire system. That’s why we are seeking reforms to protect consumers. We intend to close loopholes that allowed big financial firms to trade risky financial products, like credit-default swaps and other derivatives, without oversight; to identify system-wide risks that could cause a meltdown; to strengthen capital and liquidity requirements, to make the system more stable, and to ensure that the failure of any large firm does not take the entire economy down with it. Never again will the American taxpayer be held hostage by a bank that is too big to fail. Now, limits on the risks major financial firms can take are central to the reforms that I have proposed. They are central to the legislation that has passed the House, under the leadership of Chairman Barney Frank, and that we’re working to pass in the Senate, under the leadership of Chairman Chris Dodd. As part of these efforts, today, I’m proposing two additional reforms that I believe will strengthen the financial system while preventing future crises. First, we should no longer allow banks to stray too far from their central mission of serving their customers. In recent years, too many financial firms have put taxpayer money at risk by operating hedge funds and private equity funds and making riskier investments, to reap a quick reward. And these firms have taken these risks while benefitting from special financial privileges that are reserved only for banks. Our government provides deposit insurance and other safeguards and guarantees to firms that operate banks. We do so because a stable and reliable banking system promotes sustained growth and because we learned how dangerous the failure of that system can be during the Great Depression. But these privileges were not created to bestow banks operating hedge funds or private equity funds with an unfair advantage. When banks benefit from the safety net that taxpayers provide, which includes lower-cost capital, it is not appropriate for them to turn around and use that cheap money to trade for profit. And that is especially true when this kind of trading often puts banks in direct conflict with their customers’ interests. The fact is, these kinds of trading operations can create enormous and costly risks, endangering the entire bank if things go wrong. We simply cannot accept a system in which hedge funds or private- equity firms inside banks can place huge, risky bets that are subsidized by taxpayers and that could pose a conflict of interest. And we cannot accept a system in which shareholders make money on these operations if a bank wins, but taxpayers foot the bill if a bank loses. It’s for these reasons that I’m proposing a simple and common- sense reform, which we’re calling the Volcker rule, after this tall guy behind me. Banks will no longer be allowed to own, invest or sponsor hedge funds, private-equity funds or proprietary trading operations for their own profit, unrelated to serving their customers. If financial firms want to trade for profit, that’s something they’re free to do. Indeed, doing so responsibly is a good thing for the markets and the economy. But these firms should not be allowed to run these hedge funds and private equities — funds while running a bank backed by the American people. In addition, as part of our efforts to protect against future crises, I’m also proposing that we prevent the further consolidation of our financial system. There has long been a deposit cap in place to guard against too much risk being concentrated in a single bank. The same principle should apply to wider forms of funding employed by large financial institutions in today’s economy. The American people will not be served by a financial system that comprises just a few massive firms. That’s not good for consumers; it’s not good for the economy. And through this policy, that is an outcome we will avoid. And my message to members of Congress of both parties is that we have to get this done. And my message to leaders of the financial industry is to work with us, and not against us, on needed reforms. I welcome constructive input from folks in the financial sector. But what we’ve seen so far in recent weeks is an army of industry lobbyists from Wall Street descending on Capitol Hill to try and block basic and common-sense rules of the road that would protect our economy and the American people. So if these folks want a fight, it’s a fight I’m ready to have. And my resolve is only strengthened when I see a return to old practices in some of the very firms fighting reform; when I see soaring profits and obscene bonuses at some of the very firms claiming that they can’t lend more to small businesses, they can’t keep credit- card rates low, they can’t pay a fee to refund taxpayers for the bailout without passing on the cost to shareholders or customers. That’s the claims they’re making. It’s exactly this kind of irresponsibility that makes clear reform is necessary. Now, we’ve come through a terrible crisis. The American people have paid a very high price. We simply cannot return to business as usual. That’s why we’re going to ensure that Wall Street pays back the American people for the bailout. That’s why we’re going to rein in the excess and abuse that nearly brought down our financial system. That’s why we’re going to pass these reforms into law.<< Source: <a href="http://www.businessinsider.com/let-me-be-clear-how-im-going-to-stick-it-to-wall-street-2010-1" target="_blank">http://www.businessinsider.com...t-2010-1</a> The stock market is having a kitten. Republicans to follow, no doubt.
Originally Posted By Sport Goofy The banks will exact their revenge. Watch them tighten lending in the months ahead to keep the economy in the doldrums through the mid-term elections. Then they have a chance of getting their GOP candidates back into power.
Originally Posted By mawnck >>The banks will exact their revenge.<< It has to get past the Congresscritters first. But I'm just dying to see what the reaction is on the Repub side. I notice neither Drudge nor Daily Caller has even posted about it yet, while it's the headline on HuffPo. Karl Denninger (the Market Ticker guy) is practically turning backflips of joy.
Originally Posted By Kar2oonMan >>But I'm just dying to see what the reaction is on the Repub side.<< "ObamATM wants to kill the entrepreneurial spirit in America. He wasn't content to take over healthcare and kill grandma with his death panels. Now he wants to take over her savings account, no doubt to funnel funds to his friends in Islam! No one will ever get a bank loan again because banks will be regulated out of business!!!" Or something to that effect.
Originally Posted By Sport Goofy << But I'm just dying to see what the reaction is on the Repub side. >> Let me guess: "Obama is a socialist who doesn't believe in free markets"
Originally Posted By Dabob2 <Let me guess: "Obama is a socialist who doesn't believe in free markets"> Bingo. Check out some of the comments sections just on the major news sites, and you'll see that and worse. It's just amazing. These proposals are necessary, anything but radical, and are the kind of things that have BEEN in place for most of the last century and prevented a crisis like we saw recently from happening. But no. If Obama is proposing it, it must be "socialism." And what's amazing is that although some of the comments seem to come from people in the financial sector who fear losing their ability to do whatever they please and pass the risk on to us, most of the comments (I'm guessing based on the often poor syntax and grammar) come from regular folks who are backing the banks' position even though they don't benefit from it and in fact suffer as much or more than anybody when things go wrong.
Originally Posted By Dr Hans Reinhardt Nice words he spoke, but my first reaction is to just ignore Obama since he'll simply step aside now and let the Republicans and their special interests block any proposed legislation anyway.
Originally Posted By gadzuux >> ... regular folks who are backing the banks' position even though they don't benefit from it << It's the same story with just about every issue the republicans support. They have literally millions of gullible voters they've been able to manipulate into supporting them against their own interests. Health care, economic stability, social security, equal rights protection, privacy rights, climate change, campaign finance reform, taxation, education, disaster response domestic surveillance - the laundry list is endless. In each case, the republican party's position is squarely at odds with the interests of the public, favoring corporate protectionism over the people they're supposed to be representing. And the people who vote for them are cheering them on. For any sensible person, it's hard to imagine why anyone outside of investment bankers and republican politicians would oppose financial regulation. It's just basic accountability. But some people are consumed by their own fear and ignorance. It's a simple matter to scare and manipulate these people into supporting politicians that actively seek to undermine their own security. In this case it's good ol' fashioned demagoguery - if Obama wants it, it must be bad, no matter what it is. >> [Obama:] So if these folks want a fight, it’s a fight I’m ready to have. << I'm not convinced - yet. We haven't seen him take a courageous stand on anything. Instead, he's quick to compromise and capitulate with his opponents even when he's holding a winning hand. With the health care process, he's been content to sit in the back and let others steer it through the rocky shoals of congress. Now that the efforts of an entire year is in jeopardy, he changes the subject. This isn't what I would consider to be effective leadership. He's been a little too cerebral, too "cool", too aloof and dispassionate. I'd like to see some evidence of a fire in his belly, a real passion for seeing his agenda through to the finish - some salesmanship. Of course I support the agenda, I'm just losing faith that he'll be able to get it done. K2M is right - the GOP will turn it into "Socialist Obama is nationalizing the banks!". It doesn't have to be true, it just has to be scary. And tens of millions of people will pretend to believe it.
Originally Posted By Sport Goofy << I'm not convinced - yet. We haven't seen him take a courageous stand on anything. Instead, he's quick to compromise and capitulate with his opponents even when he's holding a winning hand. >> Exactly. Where's the audacity he talked so much about in 2008?
