On financial reform, Obama warns GOP of siding with industry over taxpayers
President Obama said Friday that lobbyists for the financial sector have "found allies on the other side of the aisle" to oppose new regulations on Wall Street, and he warned Republican lawmakers that they will have a decision in the coming weeks, whether to side with an unpopular industry or the American taxpayer.
The remarks echoed ones he made Thursday night during a fundraising speech in Miami, and they bring a sharp political edge to the accelerating debate over a financial regulatory reform measure pending before the Senate.
Speaking before a meeting with his Economic Recovery Advisory Board, Obama said, "We can't allow history to repeat itself," referring to the deep recession that started in the financial sector and spread into almost every other facet of the economy.
Specifically, Obama demanded that any financial regulatory reform legislation impose new transparency requirements on derivatives trading, something that Wall Street investors worry could drive that market overseas if rules in Europe remain unchanged. Obama said he would veto legislation that did not include controls on the U.S. derivatives market.
"We need a strong and healthy financial sector to grow jobs and our economy," he said. "It's exactly because of the centrality and importance of the financial sector that we have to act."
The second anniversary of the financial system's near-collapse will come during the fall midterm campaign season, and congressional Democrats and White House officials believe that pushing for a strict new set of rules for Wall Street will help the party's prospects in November. Obama on Friday pointedly called the bill a "Wall Street reform" measure.
Following a meeting earlier this week with Obama about financial regulation, congressional Republican leaders called on Democrats to restart negotiations that broke down weeks ago over the shape of the bill.
Senate Minority Leader Mitch McConnell (Ky.) called the bill, passed by the Senate banking committee last month, a "permanent bailout" for big banks -- an assertion the White House and other Democrats deny.
"As currently constructed," the letter continued, "this bill allows for endless taxpayer bailouts of Wall Street and establishes new and unlimited regulatory powers that will stifle small businesses and community banks."
The unanimous Republican opposition raises the prospect of a filibuster if Democrats resist changes to the bill. But Obama said Friday that financial companies, not taxpayers, would pay for future "bad decisions" under the proposed measure.
"That is, no more bailouts," he said.
At a fundraiser in Miami for the Democratic National Committee, Obama told more than 1,000 supporters Thursday, "It's no surprise that the financial institutions that profit from the status quo have sent hordes of lobbyists to kill reform."
"It's like throwing a piece of meat into a piranha tank -- they're going to race to see how fast they can tear it apart," he said. "But we can't allow them to succeed."
He picked up that theme Friday, saying that an "army of lobbyists" have arrived on Capitol Hill to oppose the legislation and that "they have found some allies on the other side of the aisle."
Obama said he would like the bill to have bipartisan support. But he warned that "bipartisanship cannot mean allowing lobbyist-driven loopholes that put Americans at risk."
"Every member of Congress is going to have make a decision," Obama said. "Are they going to side with the special interests and the status quo, or are they going to side with the American people?"