Obama to Wall Street: Don't Make Me Come Here Again

The left has rapped Obama and his administration for being too cozy with Wall Street, for being too tight with the perpetrators of the debacle, and for being too unwilling to come down hard on the financial system that nearly bankrupted the nation through a combination of greed, arrogance, and incompetence.

There’s some accuracy to that point of view, and to the general sense you’ll see in the analysis of the one-year anniversary of the Lehman Brothers debacle that not much has changed on Wall Street. Banks are still using leverage, paying big bonuses, and figuring out ways to game the system to profit.

But President Obama, speaking at the heart of historic Wall Street in Federal Hall, is surveying an industry and financial system that has changed significantly in the past year. And his tone isn’t exactly conciliatory and fawning. In essence, he’s saying: don’t make me come back here again:

“Unfortunately, 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, they are choosing to ignore them. They do so not just at their own peril, but at our nation’s. So I want them to hear my words: 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.”

He pushes back against the notion that this was simply a regulatory failure. “It was a collective failure of responsibility in Washington, on Wall Street, and across America that led to the near-collapse of our financial system one year ago.“

And he tells the financial industry not to wait for regulatory reform to change the way they do business:

“One of the most important ways to rebuild the system stronger than before is to rebuild trust stronger than before–and you do not have to wait for a new law to do that. You don’t have to wait to use plain language in your dealings with consumers. You don’t have to wait to put the 2009 bonuses of your senior executives up for a shareholder vote. You don’t have to wait for a law to overhaul your pay system so that folks are rewarded for long-term performance instead of short-term gains . . . 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.”

In short, while he’s happy to be among friends and a fair number of supporters in Manhattan, he’s not really happy to be playing such a large role in the financial system, he’s eager to get out, and he wants the assembled titans of finance to straighten up and fly right. He’s trying to use the bully pulpit to get these guys to reform in advance of formal laws requiring them to do so. That’s a good tactic. But the problem on Wall Street was–and remains–that the are huge amounts of money at stake, in an industry where people are frequently motivated by the pursuit of money to the exclusion of all else, provide a powerful countervailing force to presidential rhetoric.

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