Financial overhaul

April 23, 2010 at 12:00a.m.

Obama asks industry to ‘join us instead of fighting us’

McClatchy Newspapers

NEW YORK

Speaking Thursday in the shadow of Wall Street, President Barack Obama called on the finance industry to “join us instead of fighting us” as the Senate prepared to vote next week on legislation to overhaul financial regulation in hopes of avoiding more economic calamities such as the one that’s gripped the world since 2008.

Obama took care not to demonize the financial industry in remarks at Cooper Union, a private college, and said that “unless your business model depends on bilking people, there is little to fear from these new rules.”

Goldman Sachs CEO Lloyd Blankfein, whose firm was charged last week with fraud by the Securities and Exchange Commission, was in the room. So was New York Mayor Michael Bloomberg, who’s voiced concerns that the regulations might hurt his city’s economy.

The White House invited executives from major banks and finance firms as well as stock market officials and consumer advocates.

The president told them: “I am here because I believe that these reforms are, in the end, not only in the best interest of our country, but in the best interest of the financial sector.”

He read a passage from a 1933 edition of Time magazine that described a backlash against a new layer of regulation. “The system that caused so much consternation, so much concern, was the Federal Deposit Insurance Corporation, also known as the FDIC, an institution that has successfully secured the deposits of generations of Americans,” Obama said.

The president broadly outlined the elements he considers essential to financial overhaul, but he didn’t endorse specific approaches to resolving sticking points that divide Democrats and Republicans or the Senate and the House of Representatives.

Obama described five elements he sees as necessary:

Protecting the economy from a large firm’s failure.

Limiting the size of banks and the risks that they can take.

Bringing more transparency to derivatives markets.

Creating more consumer financial protections.

Giving investors and pension holders more say in who manages companies.

He criticized as “cynical politics” Republican attempts to paint the legislation as providing for more taxpayer-financed bailouts.

On the contrary, he said, “a vote for reform is a vote to put a stop to taxpayer-funded bailouts. That’s the truth.”

In Washington, Republicans vowed to cooperate on the financial-overhaul legislation but said they still weren’t convinced that the bill wouldn’t lead to more taxpayer bailouts.