Obama: Call off battalions of lobbyists, join the financial reform effort

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Obama: Call off battalions of lobbyists

NEW YORK — President Barack Obama says Wall Street should call off its “battalions” of anti-reform lobbyists and join the government in backing new rules to prevent future economic calamities.

Speaking at Cooper Union in New York, blocks from Wall Street, Obama is issuing a call for the financial industry “to join us, instead of fighting us in this effort.”

With the hard-fought financial reform expected to go to a vote in the Senate next week, Obama says the new regulations will help both average Americans and the financial sector “despite the furious efforts of industry lobbyists to shape them to their special interests.”

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below.

WASHINGTON (AP) — President Barack Obama is taking his argument for stronger oversight of the financial industry to the city where the economic meltdown began. Without change on Wall Street, he says, America is doomed to repeat the past.

In a speech Thursday at New York’s Cooper Union college to hundreds of students, faculty, local leaders and business executives two miles from Wall Street, Obama was ramping up pressure on Congress for legislation imposing new financial regulations and explaining the risks of doing nothing.

The president also was calling on Wall Street to join — not fight — the overhaul effort.

Obama spoke at Cooper Union as a presidential candidate in March 2008 and decried practices that he said too often rewarded financial manipulation instead of productivity and sound business practices.

“I take no satisfaction in noting that my comments have largely been borne out by the events that followed,” Obama said in excerpts of his prepared remarks for Thursday, which the White House released several hours before the speech.

“But I repeat what I said then because it is essential that we learn the lessons of this crisis, so we don’t doom ourselves to repeat it. And make no mistake, that is exactly what will happen if we allow this moment to pass — an outcome that is unacceptable to me and to the American people,” he said.

The sweeping regulation represents the broadest attempt to overhaul the U.S. financial system since the 1930s, and aims to prevent another crisis. Democrats are preparing to bring the Senate version of the bill up for debate, but solid GOP opposition has complicated the effort. Senate negotiators said they had made progress toward a compromise bill that could command support from both sides.

The legislation would create a mechanism for liquidating large, interconnected financial firms that are so big that their sudden collapse could shake the economy. At the height of the crisis in 2008, the Bush administration and the Federal Reserve were forced to provide billions of taxpayer dollars to prop up the giant insurer American International Group Inc., several banks and various financial institutions considered too big to fail. The moves were highly unpopular with voters.

The bills also, for the first time, would impose oversight on the market for derivatives — complicated financial instruments whose value is derived from the value of other investments. The measures also would create a council to detect threats to the broader financial system and establish a consumer protection agency to police consumers’ dealings with banks and other financial institutions.

Republicans contend that Democratic plans to create a $50 billion fund, paid for by the industry, to help unwind failing institutions would encourage Wall Street banks to take risks and to expect future bailouts. Democrats say the fund would lead to bankruptcy, not rescue. The administration does not support the fund and would not object to its being removed from the bill.

The Senate Agriculture Committee on Wednesday approved a bill by its chairwoman, Sen. Blanche Lincoln, D-Ark., to limit banks’ ability to trade derivatives and to make such transactions more open. Lincoln’s proposal is more sweeping than those offered by the Obama administration and the House, but it is expected to become part of the Senate financial overhaul bill.

At the same time, Senate Banking Committee Chairman Chris Dodd, D-Conn., and Sen. Richard Shelby of Alabama, the panel’s top Republican, have been trying to negotiate a compromise measure that could win GOP support.

Democrats have accused Senate Republican leader Mitch McConnell of Kentucky of aiding efforts by the financial industry and others to fend off the attempt to impose tighter regulation.

McConnell has raised concerns about the bill. But he also has said the measure can be fixed and he has pushed for the bipartisan talks to continue.

“Both sides have expressed a willingness to make the changes needed to ensure without any doubt that this bill won’t put taxpayers on the hook for future bailouts of Wall Street banks,” McConnell said.

New York Mayor Michael Bloomberg was expected in the audience of approximately 700 financial industry leaders, consumer advocates, presidential advisers, local officials, students, faculty and others for Obama’s speech.

Associated Press writers Jim Kuhnhenn in Washington and Sara Kugler in New York contributed to this report.