US President Barack Obama urged lawmakers yesterday to resist pressure to weaken a financial reform bill and called again for an independent consumer watchdog to help prevent future financial crises.
As healthcare reform reaches a make-or-break vote in the House of Representatives today, Obama used his weekly radio and internet address to highlight what may become his next top domestic priority: overhauling rules that govern Wall Street.
Obama, who blames lax regulation for helping to spark the crisis, laid out his case for a bill outlined by Senator Chris Dodd ahead of a debate in the Senate’s Banking Committee tomorrow.
“No one denies that reform is needed. So the question we have to answer is very simple: will we learn from this crisis, or will we condemn ourselves to repeat it?” Obama said in the address. “That’s what’s at stake.”
The bill, which would give the Federal Reserve power to break up firms that could threaten the stability of the financial system if they suffered serious problems, faces a reasonably smooth road at the committee level, where Democrats have votes to pass the measure without Republican support.
But once it advances to the full Senate, the arithmetic changes, with Obama’s Democrats controlling only 59 of the 60 votes that will be needed to overcome procedural roadblocks likely to be thrown up by Republicans.
Obama urged Republicans who had worked with Dodd on previous versions of the bill to reconsider their decision to walk away, and he blamed bank and other financial firm lobbyists for trying to block reform.
“I urge those in the Senate who support these reforms to remain strong, to resist the pressure from those who would preserve the status quo, to stand up for their constituents and our country,” he said.
Without naming names, Obama lashed out the opposition party for using the issue to curry favour with Wall Street bosses.
“In fact, the Republican leader in the House reportedly met with a top executive of one of America’s largest banks and made thwarting reform a key part of his party’s pitch for campaign contributions,” Obama said.
House Republican Leader John Boehner told hundreds of bankers at a conference earlier this week to be tough when lobbying against reform on Capitol Hill.
A spokesman for Boehner said the Republican had not made opposing reform part of a pitch to get campaign donations. “Once again, Washington Democrats are offering partisan jabs rather than solutions,” the spokesman said.
Under Dodd’s bill, the Fed – the US central bank – would gain authority over the nation’s largest bank-holding companies and become the home to a new consumer watchdog with oversight of mortgage-related businesses and some large non-bank financial companies, such as insurers.
Obama has made the independence of the consumer agency a top priority. “I won’t accept any attempts to undermine the independence of this agency,” he said. “And I won’t accept efforts to create loopholes for the most egregious abusers of consumers, from payday lenders to auto finance companies to credit card companies.”
Obama said he was a “vigorous defender” of free markets and supported having a vibrant financial sector to give loans to businesses and citizens.
“But what we have seen over the past two years is that without reasonable and clear rules to check abuse and protect families, markets don’t function freely,” he said.
“In the absence of such rules, our financial markets spun out of control, credit markets froze, and our economy nearly plummeted into a second Great Depression.”