Obama Edge on Financial Reform
Jules Witcover

As the Senate gears up to debate and vote on reform of the financial industry, the Democrats find themselves in a much more advantageous position than they were in the health-care fight they barely managed to win.

President Obama, the clear underdog going into that earlier confrontation against unified Republican opposition, this time does not have public opinion generally and the noisy tea party movement particularly snapping at his heels. Both are with him on blowing the whistle on Wall Street excess and avarice.

The president reflected his stronger hand in his Cooper Union admonition to the financial industry's titans to take the public interest into greater account. He called on them not to resist tighter rein on their dealings, including creation of a new consumer protection agency on financial deals.

In doing so, however, Obama played the good cop rather than simply a stern enforcer, lacing his comments with references to the vital role Wall Street plays and must play as a leading engine in the nation's economy.

"I believe in a strong financial sector that helps people to raise capital and get loans and invest their savings," he said. "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....

"Some -- and let me be clear, not all -- on Wall Street forgot that behind every dollar traded or leveraged, there is a family looking to buy a house, pay for an education, open a business, save for retirement. What happens on Wall Street has real consequences across our country, across our economy."

The financial crisis, Obama noted, "wasn't just the result of decisions made in the executive suites on Wall Street; it was also the result of decisions made around kitchen tables across America, by folks who took on mortgages and credit cards and auto loans. And while it's true that many Americans took on financial obligations that they knew or should have known they could not have afforded, millions of others were, frankly, duped. They were misled by deceptive terms and conditions, buried deep in the fine print."

In reminding the Wall Street banking titans of the impact of their actions on Main Street, Obama aimed his harshest attacks on "battalions of financial industry lobbyists" who work for them and urged their employers to call them off in the reform debate. But he also hit the titans on the huge executive salaries and bonuses that have so inflamed the tea party activists.

"Now, Americans don't begrudge anybody for success when that success is earned," the president said. But when voters read about "enormous executive bonuses at firms -- even as they're relying on assistance from taxpayers or they're taking huge risks that threaten the system as a whole or their company is doing badly -- it offends our fundamental values.

"Not only that, some of the salaries and bonuses that we've seen create perverse incentives to take reckless risks that contributed to the crisis. It's what helped lead to a relentless focus on a company's next quarter, to the detriment of its next year or its next decade. And it led to a situation in which folks with the most to lose -- stock and pension holders -- had the least to say in the process. And that has to change."

As Obama was delivering this milder cajoling, Senate Majority Leader Harry Reid was playing the bad cop, directly and harshly demanding that Senate Republicans stop their obstructionism and get on with debate and voting on the reform bill.

To urgings from Senate Minority Leader Mitch McConnell for more time to negotiate, Reid responded: "I'm not going to waste any more time of the American people." Whereupon McConnell, who was in the forefront of the solid GOP stonewall against health care, huffed: "I don't think that bipartisanship is a waste of time."

This good cop/bad cop routine by Obama and Reid clearly gives the Democrats the upper hand as the financial industry reform fight comes to a head.

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