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Obama urges financial industry to back reform

US President Barack Obama speaks about reforming Wall

US President Barack Obama speaks about reforming Wall Street and the financial reform bill in the Great Hall at Cooper Union in New York. (April 22, 2010) Credit: Getty Images

President Barack Obama reached out a conciliatory hand to the titans of Wall Street Thursday, telling them they too will benefit from the package of financial industry reforms now moving through Congress.

In a speech that was by turns respectful and scolding, Obama said it was time to put an end to the "highly leveraged, loosely monitored gambling" that had put taxpayers and the economy in jeopardy and triggered the worst recession in generations.

"Unless your business model depends on bilking people, there's little to fear from these new rules," he told the 700 business, political and union leaders at The Cooper Union in Manhattan.

"I believe in a strong financial sector," the president said as top executives of Goldman Sachs, the firm most recently in the spotlight, listened glumly in the third row. "But a free market was never meant to be a free license to take whatever you can get, however you can get it."

Obama is enormously popular in New York, but his proposals met with mixed reactions from New York officials, especially Mayor Michael Bloomberg, himself a Wall Street veteran, who warned afterward at a Times Square news conference that some elements of the package could drive business overseas and put New Yorkers out of work.

"The president is right: We need new regulations," Bloomberg said, but added: "They need to be smart regulations."

Obama said the financial industry had dispatched "battalions" of lobbyists to weaken the proposals he outlined Thursday. Those include:

A system to shield taxpayers and the economy if a large firm begins to fail.

The so-called "Volcker rule," which limits the size of banks and the risks they can take.

Steps to add transparency to financial markets, derivatives and other complicated financial instruments.

Stronger consumer protections, overseen by a single dedicated agency.

More of a role for investors and pension holders in deciding salaries and bonuses awarded to top executives at companies in which they've placed their savings.

But Bloomberg, who built a communications empire on financial transparency, said limiting the size of financial firms or banning proprietary trading would drive those businesses overseas, while assessing new taxes on the financial services industry would damage a key sector of this state's economy.

"In New York, Wall Street is Main Street," Gov. David A. Paterson agreed afterward, noting that it accounts for 22 percent of the state's tax base. "Wall Street is the same thing to New York as oil is to Texas, or grapes to California or the auto industry to Michigan. . . . I think we have to equitably make sure that New York can still function as the engine of America's economy."

Still, former Gov. Mario Cuomo said he believed Obama's speech had "enlightened" and reassured many in the financial sector who have complained they are being demonized for the recent financial meltdown.

"Wall Street's very good at buying and selling," Cuomo said. "If they want to make a good investment, I think they'll invest in what he said in this speech."

Others in attendance included state Attorney General Andrew Cuomo, Rep. Carolyn Maloney (D-Manhattan) and state Comptroller Thomas DiNapoli.

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