President Obama today accused some on Wall Street of returning to the reckless ways that caused the recent financial crisis.
Obama warned against overconfidence at Federal Hall in New York, in a speech about the recent financial crisis.
A year ago, “as investors and pension-holders watched with dread and dismay, and after a series of emergency meetings, often conducted in the dead of the night, several of the world’s largest and oldest financial institutions had fallen,” Obama said. “Other large firms teetered on the brink of insolvency. Credit markets froze as banks refused to lend not only to families and businesses, but to one another.” Congress and the previous administration took difficult but necessary actions to cope with the crisis, but, “when this administration walked through the door in January, the situation remained urgent”
Obama said his economic team helped turn things around by taking aggressive steps to open the books of the large financial firms and get loans flowing again.
Today, the banks that the government helped have repaid about $70 billion, and, in cases in which the government has sold its stakes completely, “taxpayers have actually earned a 17% return on their investment,” Obama reported. Because of the increasing stability, the government has been able to eliminate a $250 billion emergency budget reserve, he added.
“We’re beginning to return to normalcy,” Obama said. “But here’s what I want to emphasize today: Normalcy cannot lead to complacency.”
Some are ignoring the lessons of the recent financial crisis, Obama said.
“I want everybody here to hear my words: 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,” Obama said. “Those on Wall Street cannot resume taking risks without regard for consequences, and expect that next time, American taxpayers will be there to break their fall.”
Obama made no direct references to his administration’s insurance industry reform proposals, and a U.S. Treasury Department report mentioned the insurance industry only in passing.
But Obama seemed to have insurance industry, along with others, in mind when he talked about what he believes to be lingering flaws in the U.S. financial services regulatory system.