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What Obama wants for financial reform

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Kai Ryssdal: Federal Hall in New York City sits literally across the street from the New York Stock Exchange and figuratively around the corner from where the financial crisis was created — at the big investment banks. Today the president chose Wall Street as the place to mark the bankruptcy of Lehman Brothers one year ago. Also, to call on Congress to get moving on regulatory reforms that have largely stalled as health care has taken over.

Our Washington bureau chief John Dimsdale reports.

JOHN DIMSDALE: Obama said the financial system is returning to normalcy. But he warned the industry not to be complacent.

PRESIDENT OBAMA: We will not go back to the days of reckless behavior and unchecked excess that was at the heart of this crisis, where too many were motivated only by the appetite for quick kills and bloated bonuses.

Last June, the president called for beefing up the Federal Reserve Board’s oversight of the entire banking system. And for a financial consumer protection agency to oversee risky financial products. But those reforms are standing in legislative line behind health care.

So Obama called for immediate voluntary action by the industry. Why wait to give shareholders oversight of executive salary packages, for example, or to re-negotiate mortgage terms?

Ken Bentsen is with the Securities Industry and Financial Markets Association.

KEN BENTSEN: Our member firms, agree with that and have been taking steps in advance of any new regulatory changes or laws to move in adopting guidelines to address things like this issue of executive compensation in advance of waiting for Congress or someone else to do something about it.

That wait could be a while. Barbara Mathews, a consultant and former staffer for the House Financial Services Committee, says reforms shouldn’t be rushed.

BARBARA MATHEWS: I don’t view it as a disaster if regulatory reform drags into next year because I think the odds increase if it’s done properly, that we will have a much more solid structural change.

Still, the president is asking for regulatory reform by the end of the year.

In Washington, I’m John Dimsdale for Marketplace

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