The last time President Obama appeared at Cooper Union, he wasnt the president yet, but on the campaign trail and hoping to keep his political mojo working.
Some pundits have concluded that once more hes after that ever elusive mojo that has been the wellspring of his political success, and if the standing ovation at the end of his speech on Thursday morning is any indication, the mojo is back and Wall Street better watch out.
After acknowledging the dignitaries in the front rows of the Great Hall, including Governor David Paterson, Mayor Michael Bloomberg, Rep. Carolyn Maloney, and State Comptroller Thomas DiNapoli, and George Campbell, the president of Cooper Union, Obama cut to the chase, noting it was good to be back in lower Manhattan, and a few blocks from Wall Street, the heart of our nations financial sector, he said slyly.
There other notable elected and unelected officials in the house such as Ombudsman Bill de Blasio, Assemblyman Keith Wright, the Rev. Dr. Calvin Butts, banker Deborah Wright, and the Rev. Al Sharpton who went unmentioned.
But before offering a detailed analysis of the proposed reform, Obama delivered some good news about the economy, despite the disheartening SEC charges of fraud against Goldman Sachs.
Today, the economy is growing, he announced. In fact, we’ve seen the fastest turnaround in growth in nearly three decades.
Even so, he quickly added, interrupting a number of incredulous stares among audience members, there was still much work to be done to completely turn the economy around and rein in the recklessness of Wall Street and our nations banks.
Until the millions of our neighbors who are looking for work can find jobs, and wages are growing at a meaningful pace, we may be able to claim a recovery — but we will not have recovered, Obama said.
The president said that major steps have been made to bring about a comprehensive plan of financial reform.
One such bill has passed the House of Representatives and the Senate is currently debating another one which melds the ideas from Democrats and Republicans. Both bills represent significant improvement on the flawed rules we have in place today, despite the furious efforts of industry lobbyists to shape them to their special interests, Obama asserted. I am sure that many of those lobbyists work for some of you. But I am here today because I want to urge you to join us, instead of fighting us in this effort. These words brought a round of loud applause.
I am here, he said, because I believe that these reforms are, in the end, not only in the best interest of our country, but in the best interest of our financial sector. And I am here to explain what reform will look like, and why it matters.
First, Obama said, we must put a stop to taxpayer-funded bailouts and put incentives in place within the industry to make sure no one company can ever threaten to bring down the whole economy .To that end, the bill would also enact whats known as the Volker Rule: which places some limits on the size of banks and that kinds of risks that banking institutions can take.
The latter remarks were made with a nod to economist Paul Volker who sat in the front of the auditorium to Obamas left.
Secondly, the president continued, reform would bring new transparency to many financial markets. As you know, part of what led to this crisis were firms like AIG and others making huge and risky bets — using derivatives and other complicated financial instruments — in ways that defied accountability, or even common sense. In fact, many practices were so opaque and complex that few within these companies — let alone those charged with oversight — were fully aware of the massive wagers being made. That’s what led Warren Buffett to describe derivatives that were bought and sold with little oversight as financial weapons of mass destruction.
After a riff or two on the rampant recklessness of Wall Street, Obama mentioned that he was encouraged that at least one Republican may be coming across the aisle to support the bill, thereby removing the possibility of a filibuster. Could this be one of the ladies from Maine?
Obama said that consumer financial protection was the third part of his reform plan. Because this financial crisis wasn’t just the result of decisions made in the executive suites on Wall Street, he observed, it was also the result of decisions made around kitchen tables across America, by folks taking on mortgages and credit cards and auto loans. And while its true that many Americans took on financial obligations they knew — or should have known — they could not afford, millions of others were, frankly, duped. They were misled by deceptive terms and conditions, buried deep in the fine print.
The final measure of the bill, Obama stressed, will provide shareholders new power in the financial system.
They’ll get a say on pay, he said of the shareholders, a voice with respect to the salaries and bonuses awarded to top executives. And the SEC will have the authority to give shareholders more say in corporate elections, so that investors and pension holders have a stronger role in determining who manages the companies in which they’ve placed their savings.
In a direct challenge to those Republicans not on aboard with his plan, Obama said it was time put aside the cynicism, thats why Im here.
Toward the end of his speech he cited the unending tension between the desire to allow free markets to function without interference and the absolute necessity of rules to prevent markets from failing out of balance.
And balance was the operative word, or so it seemed as he noted that our system only works — our markets are only free — when there are basic safeguards that prevent abuse, that check excess, that ensure that it is more profitable to play by the rules than to game the system. And that is what these reforms are designed to achieve: no more, no less. Because that is how we will ensure that our economy works for consumers, that it works for investors, that it works for financial institutions –that it works for all of us he concluded.
With that said Obama stepped from the lectern, waved for a moment or two to the standing ovation, and left the stage with his mojo well intact.