In his weekly address President Barack Obama reiterated his call for comprehensive reforms to the financial system including commonsense rules of the road and a Consumer Financial Protection Agency that will advocate for everyday Americans. The President also urged the Senate to remain strong and resist the pressure of those who wish to preserve the status quo.
“On Monday, the Banking Committee of the United States Senate will debate a proposal to address the abuse and excess that led to the worst financial crisis in generations. These reforms are essential. As I’ve urged over the past year, we need common-sense rules that will our allow markets to function fairly and freely while reining in the worst practices of the financial industry. That’s the central lesson of this crisis. And we fail to heed that lesson at our peril.
Of course, there were many causes of the economic turmoil that ripped through our country over the past two years. But it was a crisis that began in our financial system. Large banks engaged in reckless financial speculation without regard for the consequences – and without tough oversight. Financial firms invented and sold complicated financial products to escape scrutiny and conceal enormous risks. And there were some who engaged in the rampant exploitation of consumers to turn a quick profit no matter who was hurt in the process.
Now, I have long been a vigorous defender of free markets. And I believe we need a strong and vibrant financial sector so that businesses can get loans; families can afford mortgages; entrepreneurs can find the capital to start a new company, sell a new product, offer a new service. 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. In fact, it was just the opposite. 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.
That’s why financial reform is so necessary. And after months of bipartisan work, Senator Chris Dodd and his committee have offered a strong foundation for reform, in line with the proposal I previously laid out, and in line with the reform bill passed by the House. (more…)