President Barack Obama visited the Great Hall at Cooper Union in New York to call on Wall Street executives to stop fighting efforts in the Senate to pass financial regulatory reform.
"A comprehensive plan to achieve these reforms has passed the House of Representatives, he said. A Senate version is currently being debated, drawing on the ideas of Democrats and Republicans. Both bills represent significant improvement on the flawed rules we have in place today, despite the furious efforts of industry lobbyists to shape this legislation to their special interests. I am sure that many of those lobbyists work for some of you and they are doing what they are paid to do. But I am here today specifically when I speak to the titans of industry because I want to urge you to join us, instead of fighting us in this effort. I am here because I believe that these reforms are, in the end, not only in the best interests of our country, but in the best interests of our financial sector.
Obama noted concerns about the creation of a special liquidation fund to shut down failing financial institutions, which critics have said could provide a vehicle for future government bailouts of banks.
"We need a system to shut these firms down with the least amount of collateral damage to innocent people and businesses, he said. And from the start, I've insisted that the financial industry and not taxpayers shoulder the costs in the event that a large financial company should falter. The goal is to make certain that taxpayers are never again on the hook because a firm is deemed too big to fail. Now, there is a legitimate debate taking place about how best to ensure taxpayers are held harmless in this process. But what is not legitimate is to suggest that were enabling or encouraging future taxpayer bailouts, as some have claimed. That may make for a good sound bite, but it's not factually accurate. In fact, the system as it stands is what led to a series of massive, costly taxpayer bailouts. Only with reform can we avoid a similar outcome in the future. A vote for reform is a vote to put a stop to taxpayer-funded bailouts.
Obama argued that the financial reform bill would bring added transparency to many financial markets, including derivatives trading such as those that brought down AIG. That's what led Warren Buffett to describe derivatives that were bought and sold with little oversight as financial weapons of mass destruction. And that's why reform will rein in excess and help ensure that these kinds of transactions take place in the light of day, he said.
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