Obama aides: No easing of financial rules

WASHINGTON - The White House, fearing public resentment of rising salaries and bonuses at financial firms just rescued by the government, pushed back yesterday against industry efforts to weaken plans to revamp financial regulations.

Key administration officials said yesterday that they were frustrated that major financial firms were fighting President Obama on the regulatory overhaul after taxpayer bailouts helped the firms regain profits and restore near-record compensation for their executives.

Their anger is directed even at companies such as New York-based JPMorgan Chase & Co. and Goldman Sachs Group Inc. that have paid back their government assistance and reported a surge in third-quarter earnings last week.

"The American people have a right to be frustrated and angry," chief of staff Rahm Emanuel said, speaking on CNN's State of the Union. Banks receiving U.S. aid are "literally going and fighting the very type of regulations and reforms that are necessary to prevent, again, a crisis like this happening."

Yesterday's remarks are the latest in an administration pushback highlighting what it says is a disconnect between Wall Street and the rest of the country:

While some big banks report compensation plans and profits at pre-crisis levels, the unemployment rate rose to 9.8 percent last month and home foreclosures jumped 29.2 percent from a year earlier.

The tougher message is being repeated from the president on down.

Now is the time for "firm rules of the road so that banks can't game the system, and the financial crisis on Wall Street doesn't end up hurting folks on Main Street," Obama said Thursday at a Democratic Party fund-raiser in San Francisco.

On yesterday's talk shows, his advisers sought to show that the bankers have an obligation after receiving taxpayer assistance when the credit markets seized.

"They have responsibilities," senior adviser David Axelrod said on ABC's This Week. "They ought to express them by increasing lending, which is what we need right now, and by standing down."

Obama is renewing his push to redo financial-industry regulations by the end of the year. Many of his proposals, particularly the creation of a Consumer Financial Protection Agency, are facing stiff industry opposition.

Groups led by the Financial Services Roundtable and American Bankers Association, both based in Washington, urged Congress in July to drop the consumer agency, saying the creation of a new regulator would cut consumer access to credit.

Lloyd Blankfein, Goldman Sachs' chairman and chief executive officer, said Friday that he didn't expect a "backlash" when he accepted government funds.

The most politically volatile issue is executive compensation. Obama has said he believes some of the public resistance to his agenda stems from resentment about rising executive salaries and bonuses following on the government rescue.

Administration officials have noted the appointment of Kenneth Feinberg to oversee compensation plans at the top firms that have not repaid the federal government. They also cite Obama's support for giving shareholders a nonbinding say on compensation.

A White House adviser pledged yesterday that administration officials would appear on Fox News despite assertions by the president's inner circle that the cable channel is a GOP mouthpiece.

Appearing on ABC's This Week, senior Obama adviser David Axelrod said Fox News should not be treated as a news organization. "And the bigger thing is that other news organizations, like yours, ought not to treat them that way, and we're not going to treat them that way," he said.

Still, Axelrod said, administration officials would appear on the channel.

Last week, White House communications director Anita Dunn said Fox News operates "almost as either the research arm or the communications arm of the Republican Party." Yesterday, Rahm Emanuel, President Obama's chief of staff, said, "It is not a news organization so much as it has a perspective."

In response to the criticism, Fox News executive Michael Clemente yesterday accused the White House of continuing to "declare war on a news organization."

- Associated Press

EndText