President Obama challenged some of the nation’s most influential bankers on Thursday to call off their “battalions of financial industry lobbyists” and embrace a new regulatory structure meant to avert another economic crisis.
Speaking in the bankers’ backyard, at the Cooper Union in Manhattan, Mr. Obama castigated the “failure of responsibility” by Wall Street that led to the financial crisis of 2008 and pressed his case for what he called “a common-sense, reasonable, non-ideological” system of tighter regulation to prevent any recurrence.
“That may make for a good sound bite, but it’s not factually accurate,” Mr. Obama said. “It is not true. In fact, the system as it stands is what led to a series of massive, costly taxpayer bailouts. And it’s only with reform that we can we avoid a similar outcome in the future. In other words, a vote for reform is a vote to put a stop to taxpayer-funded bailouts. That’s the truth. End of story.”
He said scrupulous business leaders had no reason to resist his regulation plan. “The only people who ought to fear the kind of oversight and transparency that we’re proposing are those whose conduct will fail this scrutiny,” he said.
And as part of his reforms, Obama could return the million dollars that he received from Goldman Sachs.
“And give us the stick with which to beat you!”
Do not forget. Never forget. Regulation always helps the largest players in any industry, and it cripples both innovators and smaller competitors.
Goldman Sachs is by far the largest player in this industry. They’ll all pretend, but Goldman welcomes any regulations — which they can largely avoid, and their competitors cannot.
Regulation is generally a subtle form of graft.
What about transparency and oversight for the White House that was promised? Obama’s White House is probably the most closed to the general citizenry in recent history. Congress it seems is afraid to show us what they do, afraid that they might not know better than us what we need or want.
Obama is a demagogue, pure and simple.
Clueless you beat me to it, not to mention the revolving door between the White House and Goldman Sachs..scrupulous in business practices indeed..www.washingtonexaminer.com/…/Is-Goldman-Obamas-Enron-No-its-worse-91613449.html
These two online articles, which overlap in part, are each enlightening about the Goldman Sachs personnel constantly in and out of the White House:
http://www.mcclatchydc.com/2010/04/21/92637/goldmans-connections-to-white.html#ixzz0lpzAP4Zn
http://michellemalkin.com/2010/04/21/all-the-presidents-goldman-sachs-men/
Now when is someone going to research the web for the longer view back to when Brooksley Born was warning in the 1990s about the possible dire consequences of failing to regulate CDO’s and the like, and Rubin and Greenspan and their colleague (name escaping me just now but who later repented) bullied her into dropping the issue? When?
What is happening now is merely that everyone will be punished because someone broke the rules and ruined the game. That is not the same as real reform. Punishing everyone because someone went out of bounds is about all this administration seems to know.
Big business loves big government, and vice versa.
Bart Hall, of course, offers no evidence. Merely ideology.
I wonder why so many lobbyists oppose regulation.
Yes, Big Government is in bed with Big Business. Maybe Obama’s proposals are not THE answer, but something has to be done about this, don’t we all agree on that? What do you propose to do? Millions have seen their lives turned upside down by unrestrained greed and government protected risk-taking. Ordinary citizens who should expect some measure of advocacy on their behalf by the SEC have been sold down the river, and accountants who are supposed to be guardians of the public trust instead devote their time to creating new ways to obscure the nefarious schemes of their clients… Are we saying nothing can be done about this?
RE: “What do you propose to do?”
One could start by allowing the businesses that screwed up so massively to go out of business, rather than spending billions and billions bailing out their huge errors.
Then we would be left with the companies who did not undertake “government pretected risk-taking” or obscuring “nefarious schemes.”
That would be a start.
I think John Wilkins offers ideology not evidence-Lobbyist lobby for regulations that helps their interests-Goldman Sachs got multibilion dollar loans, and is still in business etc….
#11, how many bailouts were needed between 1936 and 1980? Over the last 30 years, as deregulation processed, it seems that there have been several major … glitches in the free market. Savings and Loans; Long Term Capital Management…. Banks didn’t do a very good job of regulating themselves. I’m not surprised – they’re sinners, who… deal in mammon.
Add that real wages for most people have declined since 1980.
One thing is for sure: when it gets down to it, most big bankers are socialists when things get bad.
Proposed: Government stop social engineering in a free enterprise system. This whole thing started with gov’t, Congress and Geo. W. Bush, pushing lending institutions to loan money to persons who did not meet credit standards required for such loans – everyone should be a homeowner – remember that? In a government controlled system, bad assets can be controlled and taken care of as they occur. In a free enterprise system, where investment and profit are the objectives, bad assets are going to be hidden or turned into something that can be called, for book purposes, a good asset – i.e. CDOs. Just like the lack of necessity for “hate crime” laws, where laws are already there to control such crimes, the regs are already there to control what happened in this melt down. They just need and needed to be enforced – or Congress and the Pres needs to allow them to be enforced, with no bailouts – i.e. get rid of Freddie and Fannie and make these lending institutions stand on their own, and when they make bad investments, let them fail. The market will clean itself, if government will get out of the way. These regs proposed by BHO’s administration are truly foolish. This is like a man hanging off a building, holding onto a rope that is fraying, and the government comes along and puts a rope around his neck and says, don’t worry, when your rope breaks from fraying, we have you secure with our rope around your neck. We’ll save you but we’ll choke the life out of you.
Billy-The bad loan business started under Carter and the Community Reinvestment Act, came to life under Clinton and ACORN, and given a steroid boost by Bush! These pesky reform laws have ways of creating problems that do not surface for years after the act is passed
From Paul Krugman in today’s NY Times:
[blockquote] Remember the 1987 movie “Wall Street,†in which Gordon Gekko declared: Greed is good? By today’s standards, Gekko was a piker. In the years leading up to the 2008 crisis, the financial industry accounted for a third of total domestic profits — about twice its share two decades earlier.
These profits were justified, we were told, because the industry was doing great things for the economy. It was channeling capital to productive uses; it was spreading risk; it was enhancing financial stability. None of those were true. Capital was channeled not to job-creating innovators, but into an unsustainable housing bubble; risk was concentrated, not spread; and when the housing bubble burst, the supposedly stable financial system imploded, with the worst global slump since the Great Depression as collateral damage.
So why were bankers raking it in? My take, reflecting the efforts of financial economists to make sense of the catastrophe, is that it was mainly about gambling with other people’s money. The financial industry took big, risky bets with borrowed funds — bets that paid high returns until they went bad — but was able to borrow cheaply because investors didn’t understand how fragile the industry was.
And what about the much-touted benefits of financial innovation? I’m with the economists Andrei Shleifer and Robert Vishny, who argue in a recent paper that a lot of that innovation was about creating the illusion of safety, providing investors with “false substitutes†for old-fashioned assets like bank deposits. Eventually the illusion failed — and the result was a disastrous financial crisis[/blockquote]
Bernie Madoff said it best: “Wall Street is 20 guys betting against each other” [with other people’s money, it might be added. Sometimes using other people’s money to bet against their clients’ money a la Goldman Sachs.]
# 12-Yes and lobbyists have been there every step of the way to insure those they represent have thier place at the table. Lobbyist love regulations like lawyers love a good malpractice case..or cabnet makers a prime piece of walnut!
And don[‘t forget that Fannie and Freddie have cost or will cost tax payers about $400 billion and are not included in Obama and Democratic reform package! online.wsj.com/…/SB10001424052748704671904575193910683111250.html
Sarah, your answer is perfect except for one small thing: Allowing businesses that made these “huge mistakes” to fail as they should would take down hundreds, maybe thousands, of businesses that had no part in those mistakes, and indeed may have tried to fight against them. I’m not sure what businesses you’re talking about (I can guess) but most of these errant businesses–“too big to fail”–were forced into a corner by government regulation or misguided government incentives. So, now we are being asked to take a dose of “hair o’ the dog that bit ya,” i.e. more government regulation and incentives. Clearly not the fix we need, but short of moral revival in the boardroom, what can be done? On a very practical level, maybe nothing, but when election time comes at least one candidate can say “I tried.” Whether true or not, the appearance is that the other side is lining up behind the fat cats on Wall Street.