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Tuesday, September 15, 2009

Obama wants Wall Street to know change is coming

It’s been a year since the collapse of Lehman Bros. touched off a September we’d rather not remember.

A year of houses of cards, trillions of dollars of wealth destruction, and a federal Troubled Asset Relief Program that provided a lot of relief but never touched those troubled assets.

How are you feeling now?

Still angry about the financial crisis and bank bailouts, based on comments sent to me via e-mail or phone.

That’s why it seems odd to read reports that federal efforts to change the financial regulatory system are stalled, because so little has changed in the last 12 months. Outside of new rules for the credit-card industry, the same environment of incentives, risk-taking, and market opacity exists today that did last year.

Consumer anger carries change only so far. That’s why President Obama was in New York yesterday to renew the push for his menu of financial-sector reforms, which include creating the Consumer Financial Protection Agency and expanding the Federal Reserve powers to regulate financial institutions that pose systemic risk.

There was nothing new in his speech. All of his priorities have been addressed in congressional hearings this year. Rather, the president was reminding Wall Street and Congress that doing nothing is not an option.

While you would expect the banking industry to resist major regulatory change, it’s illustrative that federal regulators have shown a distressing lack of resolve as well. Within the Obama administration itself, the heads of the alphabet soup of the CFTC, FDIC, OCC, and SEC have publicly squabbled over whose mission should be changed and how.

With Rome, or at least Wall Street, not burning, President Obama reminded all actors, good and bad, that the taxpayers were not amused: “They shouldered the burden of the bailout, and they are still bearing the burden of the fallout - in lost jobs and lost homes and lost opportunities.”

That’s a good reality check. Here’s another: The biggest U.S. banks are now bigger, not smaller. These behemoths may be needed to support the nascent economic recovery, but even after adding more capital, they still pose as much risk to the system now as they did when Lehman was allowed to fail.
Posted by Mike Armstrong @ 2:05 AM  Permalink | File Under: Financial Services | 8 comments
Comments   
  • 0 like this / 0 don't   •   Posted 6:09 AM, 09/15/2009
    The problem is that the people have returned to the task of surviving the economy and the furor has died down and so has the concern of Congress. The only way to get the attention of the politicians again is to jeopardize their incumbent status. Write and/or call your reps! What happened to the issue of the bonuses for AIG? Would they have gotten them or had a job without the bailout funds?
    — overtaxed
  • 0 like this / 0 don't   •   Posted 8:27 AM, 09/15/2009
    Even better change is coming. The communists will be voted out of office in 2010.
    — SilverCTS
  • 0 like this / 0 don't   •   Posted 11:55 AM, 09/15/2009
    I'm seeing a huge lack in all of this rhetoric of people taking personal responsibility for their own actions. The problems we're facing from Wall Street to health care is the people's want for the government to fix everything. Don't sign balloon mortgages, don't buy a house when you can't afford one, don't eat high fructose corn syrup ridden foods and not expect to get diabetes or cancer, and don't exercise and expect to be healthy. The government needs to stop being an enabler for people. It's getting out of control. I used to be liberal, now I'm an independent and see things more clearly now. The shenanigans in Washington only get changed by individuals doing the right things on their own.
    — RichardsCaptain08
  • 0 like this / 0 don't   •   Posted 11:57 AM, 09/15/2009
    Imagine Bob Brady in Congress working on a bill to regulate Wall Street. He'll be wearing his Eagles jersey and mummers jacket and be the gopher for pizza. That is the problem. Partisan politics that leads to the election of a congressional representative like Brady that is intellectually challenged.
    — The-Roof-Is-On-Fire
  • Comment removed.
  • Comment removed.
  • 0 like this / 0 don't   •   Posted 2:48 PM, 09/15/2009
    Keep your filthy hands off our dollars Obama. You can keep the change.
    — BFlint
  • 0 like this / 0 don't   •   Posted 7:03 PM, 09/15/2009
    Wall Street doesn't care what Obama says. They will do whatever they want.
    — david wayne


8 comments
About Mike Armstrong
Mike Armstrong, a business editor and writer for nearly two decades, is the Inquirer's business columnist and PhillyInc blog editor. Contact Mike via e-mail or at 215-854-2980
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