Obama’s financial reform faces opposition

Despite continued populist fury directed at Wall Street a year after the market meltdown, President Obama is fighting a strong headwind as he pushes for tougher regulation of the financial services industry.

Lawmakers of both parties on Capitol Hill are raising questions about parts of Mr. Obama’s far-reaching reform agenda, which also faces fierce and well-financed resistance from many of the major private-sector banking and investment lobbies.

Mr. Obama traveled to Wall Street on Monday to deliver a tempered scolding to corporate executives. He said they have a moral obligation to support the reforms he has proposed for greater oversight and restrictions on certain business practices.

“It is neither right nor responsible after you’ve recovered with the help of your government to shirk your obligation to the goal of wider recovery,” Mr. Obama said, speaking to financial industry executives at historic Federal Hall in Lower Manhattan.

The president made his speech on the first anniversary of the collapse of Lehman Brothers, a pivotal moment in the spiraling descent of the nation’s economy last year. During the darkest three months of the panic, the president said, “$5 trillion of American’s household wealth evaporated.”

Mr. Obama is proposing a range of regulatory measures, including greater authority to the Federal Reserve to police investment firms, a new oversight board to monitor the nation’s largest financial companies, and the creation of a consumer financial protection agency to crack down on abuses by credit card and mortgage lenders.

But with health care reform already overloading the legislative circuits, Republicans are in no hurry to advance the White House’s reform plan for Wall Street.

“President Obama supports changes that push us in the wrong direction,” said Rep. Tom Price of Georgia, chairman of the conservative Republican Study Committee.

Mr. Price called the administration’s approach “an open-ended, big-government response to a problem best solved by appropriately targeted, common-sense measures consistent with American success.”

House Minority Whip Eric Cantor, Virginia Republican, said Mr. Obama has perpetuated a “culture of bailouts” for Wall Street and has mishandled the $700 billion Troubled Asset Relief Program (TARP), which was instituted last autumn under the Bush administration to rescue troubled financial institutions.

Democrats have been far more supportive but are not entirely on board.

House Financial Services Committee Chairman Barney Frank, Massachusetts Democrat, has vowed to move Mr. Obama’s regulatory agenda through the House, but not without changes.

Mr. Frank, who was with Mr. Obama for Monday’s Wall Street speech, said in an interview with Bloomberg Television that he does not back a proposal by Mr. Obama to give the Federal Reserve sweeping oversight of the nation’s largest financial firms. Mr. Frank said Congress would authorize a council of regulators to monitor players considered “too big to fail.”

Mr. Frank also predicted that Congress would approve Mr. Obama’s idea for a consumer financial protection agency, despite private-sector reservations about the idea.

Members of the financial services industry applauded the president’s speech - at least publicly.

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