On Thursday President Barack Obama talked to some of the Wall Street’s finest on their home turf. Speaking at Cooper Union in Manhattan a few blocks from the financial capital of America, the President said he wants to work with bankers to reform the financial industry. He blamed the recession on “a failure of responsibility from Wall Street all the way to Washington.” Obama went on to say about reform measures, “When I speak to the titans of industry here…I want urge you to join us instead of fighting us.”
This very same hall was the setting of another Obama speech as a candidate in March of 2008 in which he warned “A free market was never meant to be a free license to take whatever you can get, however you can get it.” How chilling his words seem now that the world’s economy has tanked and is still recovering.
Sending a Message
Obama’s message was clear and his tone was much like many other speeches he gives to someone he no doubt disapproves of. He was trying to sound like a scolding father to a bunch of children who had misbehaved. While those in attendance clapped and applauded in the right places, the top two at Goldman Sachs were there to witness firsthand a Presidential rebuttal to what happened in the summer of 2008. Goldman Sachs is currently in litigation with the Securities and Exchange Commission over its part in the financial crisis.
The Senate’s version of the bill is aimed at creating a watchdog group in the government as a brand new entity that has stronger regulatory powers than any other group. The aim is to make a body that doesn’t have any political or statutory ties to another. Republicans are, of course, balking at the idea according to CNN. Debate has been going back and forth between the parties about how to create this new authority overseeing banks and their investments. The Senate version creates a means for national insurance to cover any banks that fail.
The House passed a financial reform package in December called the Wall Street Reform and Consumer Protection Act. It outlines that a new regulatory body be established that becomes the receiver of any bank that fails over a certain value. A separate agency would be created that reports to Congress as to the financial well-being of the country. Derivatives, much like those that caused the financial meltdown, would be sold over the internet in an open market system for the world to see.
Will Bankers Play Along?
I support Congress’ attempt to reform the financial industry. More oversight must be made because the misbehavior of a select few caused the pain and anguish of so many not only in the United States but in the entire global economy. Huge banks and CEOs will applaud politely for speeches and then send out their lobbyists. When it comes down to it, a year from now after the financial reform package has had some time to work its way into the system, banks will still find a way to make soaring profits on the backs of those of us who work hard.
According to the Wall Street Journal report on Obama’s speech, one floor trader said that “people don’t understand Wall Street” and that “we’re all being punished for mistakes.” The floor trader is precisely right. People don’t understand Wall Street.
We don’t understand how companies try to make a quick buck and then tank their finances only to be bailed out by the government and continue to function. The banks should be thankful it’s not a true free market because if it were the executives of Goldman Sachs would be in a soup kitchen line right now begging for their lunch. I think having the banks and financial entities with their books more open will lead us to a better understanding of how they operate and I welcome any openness in an allegedly open market.
Wall Street won’t suffer because they know how to make money no matter what rules are slapped upon them. That’s why they attended the speech today and applauded. I’m sure that once the bill becomes law the first thing they’ll do is find ways around it to make more money until someone finally notices when it’s already too late.
The Wall Street Journal, CNN, The White House, and the United States Congress provided information for this article.