By DARLENE SUPERVILLE, Associated Press
WASHINGTON – President Barack Obama singled out financial institutions for causing much of the economic tailspin and criticized their opposition to tighter federal oversight of their industry.
While applauding House passage Friday of overhaul legislation and urging quick Senate action, Obama expressed frustration with banks that were helped by a taxpayer bailout and now are “fighting tooth and nail with their lobbyists” against new government controls.
In his weekly radio and Internet address Saturday, Obama said the economy is only now beginning to recover from the “irresponsibility” of Wall Street institutions that “gambled on risky loans and complex financial products” in pursuit of short-term profits and big bonuses with little regard for long-term consequences.
“It was, as some have put it, risk management without the management,” he said.
The president also told CBS’ “60 Minutes” that “the people on Wall Street still don’t get it. … They’re still puzzled why it is that people are mad at the banks. Well, let’s see. You guys are drawing down $10, $20 million bonuses after America went through the worst economic year … in decades and you guys caused the problem,” Obama said in an excerpt released in advance of Sunday night’s broadcast of his interview.
The House bill, which passed 223-202, would grant the government new powers to split up companies that threaten the economy, create an agency to oversee consumer banking transactions and shine a light into shadow financial markets that have escaped federal oversight.
Obama is seeking swift approval in the Senate “because we should never again find ourselves in the position in which our only choices are bailing out banks or letting our economy collapse.”
No House Republicans voted for the bill, and 27 Democrats voted against it. Opponents argue that the broad legislation overreaches and would institutionalize bailouts for the financial industry.
The Senate Banking, Housing and Urban Affairs Committee is working on its own version of the package.
In his address, Obama contended that the worst economic downturn since the Depression wouldn’t have happened if the rules governing Wall Street been clearer and enforcement tougher.
Obama singled out Republicans and industry lobbyists for trying to block the changes.
Last week, top House Republicans urged more than 100 financial industry lobbyists to work harder to defeat the bill. Lobbyists have spent more than $300 million this year trying to scuttle the bill.
Opponents say that the changes would limit consumer choice and that added federal oversight would stunt financial market innovation.
Obama suggested that was one risk worth taking.
“Americans don’t choose to be victimized by mysterious fees, changing terms and pages and pages of fine print. And while innovation should be encouraged, risky schemes that threaten our entire economy should not,” he said. “We can’t afford to let the same phony arguments and bad habits of Washington kill financial reform and leave American consumers and our economy vulnerable to another meltdown.”
Obama has scheduled a meeting Monday at the White House with financial services industry leaders to seek support for his effort to tighten federal oversight of the industry and to limit pay for top executives at institutions that accepted billions in bailout money from the government.