President Obama addressing Wall St. executives at Federal Hall
“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.”
Mon, 14 Sept – President Obama reinvigorated his administration’s effort to reform the financial regulatory system by taking his bare knuckled message directly to Wall Street. Speaking at Federal Hall directly across the New York Stock Exchange and using the one year anniversary of the collapse of Lehman Brothers the president reminded prominent financial industry executives of their role and risk-taking behavior that led to a global economic melt-down. And flexing some muscle in the face of recent positive economic trends and a robust +48% rebound in Market performance from the March lows, the president also reminded the audience of measures his administration took to pull the Markets and the economy from the brink of collapse.
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Pulling no punches the president offered a sharp admonition that “there are some in the financial industry who are misreading this moment.” “Instead of learning the lessons of Lehman and the crisis from which we are still recovering,” he noted, “they are choosing to ignore them,” Mr. Obama said in a speech at Federal Hall in Lower Manhattan. They do so not just at their own peril, but at our nation’s.”
Instead of learning the lessons of Lehman and the crisis from which we are still recovering, they [on Wall Street] are choosing to ignore them…They do so not just at their own peril, but at our nation’s.”
Turning screws a little tighter, the president added “I want everybody here to hear my words,” Mr. Obama said. “We will not go back to the days of reckless behavior and unchecked excess at the heart of this crisis, where too many were motivated only by the appetite for quick kills and bloated bonuses. Those on Wall Street cannot resume taking risks without regard for consequences, and expect that next time, American taxpayers will be there to break their fall.”
The president shed no new light, nor offered any new proposals to his administration’s financial industry regulatory overhaul plan called the New Financial Foundations. But he did outline how his vision and his plan could prevent future systemic risk and financial system meltdowns. The president also specifically touted the administration’s plans to increase capital adequacy requirements at big banks, plans to give the Federal Reserve new oversight powers to regulate systemic risks to the financial system, and plans to establish a new consumer-protection agency, which would have broad powers over retail finance products such as credit cards, home mortgages and other consumer loans. Mr. Obama also urged banks to adopt changes before Congress acts by simplifying the language they use with consumers, overhauling their executive pay structures or allowing shareholders vote on bonuses. He vowed to press the G-20 for action on regulatory reform, and cautioned top executives not to squander public trust with huge year-end bonuses.
We will not go back to the days of reckless behavior and unchecked excess at the heart of this crisis, where too many were motivated only by the appetite for quick kills and bloated bonuses. Those on Wall Street cannot resume taking risks without regard for consequences, and expect that next time, American taxpayers will be there to break their fall.
Of particular note on the one-year anniversary of Lehman’s collapse, a Federal judge citing basic fairness principles rejected a proposed legal settlement between the SEC and Bank of America over $3.6Bn in executive bonuses. Judge Jed Rakoff wrote the settlement “does not comport with the most elementary notions of justice and morality.”
‘This settlement does not comport with the most elementary notions of justice and morality. “It is quite something else for the very management that is accused of having lied to its shareholders to determine how much of those victims’ money should be used to make the case against the management go away”’
The ruling directed both the agency and the bank to prepare for a possible trial that would begin no later than Feb. 1. The case involved $3.6 billion in bonuses that were paid by Merrill Lynch late last year, just as that firm was about to be merged with Bank of America. Neither company provided details of the bonuses to their shareholders, who voted on Dec. 5 to approve the merger. The judge focused much of his criticism on the fact that the fine in the case would be paid by the bank’s shareholders, who were the ones that were injured by the lack of disclosure. “It is quite something else for the very management that is accused of having lied to its shareholders to determine how much of those victims’ money should be used to make the case against the management go away,” the judge wrote.
Several MSM sources provided excellent coverage of the speech which are outlined below. In addition, you can find the full text of the speech here.
Web Resources:
Year later, economy poised for long recovery
Obama Pushes Stricter Rules for Wall Street
