President To Make Case For Financial Overhaul

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President Obama i

President Obama's push to overhaul the rules governing the financial system enjoys broad public support. Jewel Samad/AFP/Getty hide caption

itoggle caption Jewel Samad/AFP/Getty
President Obama

President Obama's push to overhaul the rules governing the financial system enjoys broad public support.

Jewel Samad/AFP/Getty

President Obama will make his case for new financial rules Thursday in New York, not far from Wall Street, urging the financial industry to get behind the effort.

Obama says Washington needs to put some guardrails in place if it hopes to keep the economy from going off another cliff.

"We have to acknowledge that the status quo has not worked," Obama told supporters at a California fundraiser this week. "It hasn't worked for ordinary Americans. It hasn't worked for the economy as a whole. It's worked for a few, but not for the many."

This is not a new interest for Obama. He is speaking Thursday in the same venue where as a candidate more than two years ago he called for regulatory overhaul. His message hasn't changed much since then: The invisible hand of the free market must be guided by a higher principle.

"A free market doesn't mean you should be free to do whatever you want, however you can get it, without regard to consequences," Obama said this week. "There have to be some rules of the road. There's got to be some accountability. There's got to be some transparency, or else we're going to see more abuses and disastrous meltdowns like the one we just experienced."

Public Support

This is one battle where the president enjoys broad public support. Despite growing opposition to government intervention in the economy generally, a recent poll showed more than 6 in 10 Americans want to see more regulation of the financial industry.

"There's an anti-government sentiment, but there's also anti-big business and anti-Wall Street sentiment, all tied together in sort of a populist opinion," said Andy Kohut, president of the Pew Research Center, which conducted the poll. "That's what they're tapping into."

For months, Senate Democrats and Republicans have been trying to fashion a compromise bill that would offer more consumer protection and more transparency for complex securities, and that would give the government power to dismantle big, troubled companies before they jeopardize the whole financial system. So far, no Republican senator has been willing to support the far-reaching bill. Lawmakers in both parties say, however, that they are not that far apart, and a bipartisan agreement is possible.

Senate Democrats would need at least one Republican vote to overcome a possible filibuster. Democrats might push for a vote even without that GOP backing.

"Either they'll go for a bill, or they'll go for an issue," said Sarah Binder, a senior fellow at the Brookings Institution. "I think deep down, they prefer a bill. But they seem not too unhappy about the prospects that perhaps it will blow up because then they get a campaign issue."

GOP's Dilemma

In recent days, Obama has been pointedly mocking Senate Republican leader Mitch McConnell for speaking out against the legislation after the Kentucky lawmaker met privately with Wall Street executives. The Democratic National Committee is running TV ads that blast the GOP for holding up the bill.

Republicans have grown concerned that simply blocking the measure could make them appear to be siding with unpopular Wall Street bankers.

"This has definitely been the first issue in a long time where Republicans found their rhetoric about socialism or bailouts wasn't working," said Norm Ornstein of the American Enterprise Institute. "And they were put on the defensive."

Ornstein cautions that a compromise could still break down over the details of the bill. But on Wednesday, a lone Republican — Chuck Grassley — voted for a measure in a Senate committee that would regulate derivatives and that could become part of the broader overhaul.



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