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  • The President: Thank you very much.

  • Everybody, please have a seat.

  • Thank you very much.

  • Well, thank you.

  • It is good to be back.

  • (applause)

  • It is good to be back in New York,

  • it is good to be back in the Great Hall at Cooper Union.

  • (applause)

  • We've got some special guests here that I want to acknowledge.

  • Congresswoman Carolyn Maloney is here in the house.

  • (applause)

  • Governor David Paterson is here.

  • (applause)

  • Attorney General Andrew Cuomo.

  • (applause)

  • State Comptroller Thomas DiNapoli is here.

  • (applause)

  • The Mayor of New York City, Michael Bloomberg.

  • (applause)

  • Dr. George Campbell, Jr., president of Cooper Union.

  • (applause)

  • And all the citywide elected officials who are here.

  • Thank you very much for your attendance.

  • It is wonderful to be back in Cooper Union,

  • where generations of leaders and citizens have come to defend

  • their ideas and contest their differences.

  • It's also good to be back in Lower Manhattan,

  • a few blocks from Wall Street.

  • (laughter)

  • It really is good to be back, because Wall Street's the heart

  • of our nation's financial sector.

  • Now, since I last spoke here two years ago,

  • our country has been through a terrible trial.

  • More than 8 million people have lost their jobs.

  • Countless small businesses have had to shut their doors.

  • Trillions of dollars in savings have been lost --

  • forcing seniors to put off retirement,

  • young people to postpone college,

  • entrepreneurs to give up on the dream of starting a company.

  • And as a nation we were forced to take unprecedented steps to

  • rescue the financial system and the broader economy.

  • And as a result of the decisions we made --

  • some of which, let's face it, were very unpopular --

  • we are seeing hopeful signs.

  • A little more than one year ago we were losing an average of

  • 750,000 jobs each month.

  • Today, America is adding jobs again.

  • One year ago the economy was shrinking rapidly.

  • Today the economy is growing.

  • In fact, we've seen the fastest turnaround in growth in nearly

  • three decades.

  • But you're here and I'm here because we've got more work to do.

  • Until this progress is felt not just on Wall Street but on Main

  • Street, we can't be satisfied.

  • Until the millions of our neighbors who are looking for

  • work can find a job, and wages are growing at a meaningful

  • pace, we may be able to claim a technical recovery --

  • but we will not have truly recovered.

  • And even as we seek to revive this economy,

  • it's also incumbent on us to rebuild it stronger than before.

  • We don't want an economy that has the same weaknesses that led

  • to this crisis.

  • And that means addressing some of the underlying problems that

  • led to this turmoil and devastation in the first place.

  • Now, one of the most significant contributors to this recession

  • was a financial crisis as dire as any we've known in

  • generations -- at least since the '30s.

  • And that crisis was born of a failure of responsibility --

  • from Wall Street all the way to Washington --

  • that brought down many of the world's largest financial firms

  • and nearly dragged our economy into a second Great Depression.

  • It was that failure of responsibility that I spoke

  • about when I came to New York more than two years ago --

  • before the worst of the crisis had unfolded.

  • It was back in 2007.

  • And I take no satisfaction in noting that my comments then

  • have largely been borne out by the events that followed.

  • But I repeat what I said then because it is essential that we

  • learn the lessons from 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 -- and that's an outcome that is

  • unacceptable to me and it's unacceptable to you,

  • the American people.

  • (applause)

  • As I said on this stage two years ago,

  • I believe in the power of the free market.

  • I believe in a strong financial sector that helps people to

  • raise capital and get loans and invest their savings.

  • That's part of what has made America what it is.

  • But a free market was never meant to be a free license to

  • take whatever you can get, however you can get it.

  • That's what happened too often in the years leading up to this crisis.

  • Some -- and let me be clear, not all --

  • but some on Wall Street forgot that behind every dollar traded

  • or leveraged, there's a family looking to buy a house,

  • or pay for an education, open a business, save for retirement.

  • What happens on Wall Street has real consequences across the

  • country, across our economy.

  • I've also spoken before about the need to build a new

  • foundation for economic growth in the 21st century.

  • And given the importance of the financial sector,

  • Wall Street reform is an absolutely essential part of

  • that foundation.

  • Without it, our house will continue to sit on shifting

  • sands, and our families, businesses,

  • and the global economy will be vulnerable to future crises.

  • That's why I feel so strongly that we need to enact a set of

  • updated, commonsense rules to ensure accountability on Wall

  • Street and to protect consumers in our financial system.

  • (applause)

  • Now, here's the good news: A comprehensive plan to achieve

  • these reforms has already passed the House of Representatives.

  • (applause)

  • A Senate version is currently being debated,

  • drawing on ideas from Democrats and Republicans.

  • Both bills represent significant improvement on the flawed rules

  • that we have in place today, despite the furious effort of

  • industry lobbyists to shape this legislation to their special interests.

  • And for those of you in the financial sector I'm sure that

  • some of these lobbyists work for you and they're doing what they

  • are being paid to do.

  • But I'm here today specifically --

  • when I speak to the titans of industry here --

  • because I want to urge you to join us,

  • instead of fighting us in this effort.

  • I am here --

  • (applause)

  • I'm here 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 the financial sector.

  • And I'm here to explain what reform will look like,

  • and why it matters.

  • Now, first, the bill being considered in the Senate would

  • create what we did not have before,

  • and that is a way to protect the financial system and the broader

  • economy and American taxpayers in the event that a large

  • financial firm begins to fail.

  • If there's a Lehmans or an AIG, how can we respond in a way that

  • doesn't force taxpayers to pick up the tab or, alternatively,

  • could bring down the whole system?

  • In an ordinary local bank when it approaches insolvency,

  • we've got a process, an orderly process through the FDIC,

  • that ensures that depositors are protected,

  • maintains confidence in the banking system, and it works.

  • Customers and taxpayers are protected and owners and

  • management lose their equity.

  • But we don't have that kind of process designed to contain the

  • failure of a Lehman Brothers or any of the largest and most

  • interconnected financial firms in our country.

  • That's why, when this crisis began,

  • crucial decisions about what would happen to some of the

  • world's biggest companies -- companies employing tens of

  • thousands of people and holding hundreds of billions of dollars

  • in assets -- had to take place in hurried discussions in the

  • middle of the night.

  • And that's why, to save the entire economy from an even

  • worse catastrophe, we had to deploy taxpayer dollars.

  • Now, much of that money has now been paid back and my

  • administration has proposed a fee to be paid by large

  • financial firms to recover all the money, every dime,

  • because the American people should never have been put in

  • that position in the first place.

  • (applause)

  • But this is why we need a system to shut these firms down with

  • the least amount of collateral damage to innocent people and

  • innocent businesses.

  • And from the start, I've insisted that the financial

  • industry, not taxpayers, shoulder the costs in the event

  • that a large financial company should falter.

  • The goal is to make certain that taxpayers are never again on the

  • hook because a firm is deemed "too big to fail."

  • Now, there's a legitimate debate taking place about how best to

  • ensure taxpayers are held harmless in this process.

  • And that's a legitimate debate, and I encourage that debate.

  • But what's not legitimate is to suggest that somehow the

  • legislation being proposed is going to encourage future

  • taxpayer bailouts, as some have claimed.

  • That makes for a good sound bite,

  • but it's not factually accurate.

  • It is not true.

  • In fact, the system as it stands --

  • (applause)

  • -- the system as it stands is what led to a series of massive,

  • costly taxpayer bailouts.

  • And it's only with reform that we can avoid a similar outcome

  • in the future.

  • In other words, a vote for reform is a vote to put a stop

  • to taxpayer-funded bailouts.

  • That's the truth.

  • End of story.

  • And nobody should be fooled in this debate.

  • (applause)

  • By the way, these changes have the added benefit of creating

  • incentives within the industry to ensure that no one company

  • can ever threaten to bring down the whole economy.

  • To that end, the bill would also enact what's known as the

  • Volcker Rule -- and there's a tall guy sitting in the front

  • row here, Paul Volcker --

  • (applause)

  • -- who we named it after.

  • And it does something very simple: It places some limits on

  • the size of banks and the kinds of risks that banking

  • institutions can take.

  • This will not only safeguard our system against crises,

  • this will also make our system stronger and more competitive by

  • instilling confidence here at home and across the globe.

  • Markets depend on that confidence.

  • Part of what led to the turmoil of the past two years was that

  • in the absence of clear rules and sound practices,

  • people didn't trust that our system was one in which it was

  • safe to invest or lend.

  • As we've seen, that harms all of us.

  • So by enacting these reforms, we'll help ensure that our

  • financial system -- and our economy --

  • continues to be the envy of the world.

  • That's the first thing, making sure that we can wind down one

  • firm if it gets into trouble without bringing the whole

  • system down or forcing taxpayers to fund a bailout.

  • Number two, reform would bring new transparency to many

  • financial markets.

  • As you know, part of what led to this crisis was firms like AIG

  • and others who were 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, so confusing,

  • so complex that the people inside the firms didn't

  • understand them, much less those who were charged with overseeing them.

  • They weren't fully aware of the massive bets that were being placed.

  • That's what led Warren Buffett to describe derivatives that

  • were bought and sold with little oversight as "financial weapons

  • of mass destruction."

  • That's what he called them.

  • And that's why reform will rein in excess and help ensure that

  • these kinds of transactions take place in the light of day.

  • Now, there's been a great deal of concern about these changes.

  • So I want to reiterate: There is a legitimate role for these

  • financial instruments in our economy.

  • They can help allay risk and spur investment.

  • And there are a lot of companies that use these instruments to

  • that legitimate end -- they are managing exposure to fluctuating

  • prices or currencies, fluctuating markets.

  • For example, a business might hedge against rising oil prices

  • by buying a financial product to secure stable fuel costs,

  • so an airlines might have an interest in locking in a decent price.

  • That's how markets are supposed to work.

  • The problem is these markets operated in the shadows of our

  • economy, invisible to regulators,

  • invisible to the public.

  • So reckless practices were rampant.