By Heather Grossmann and Michael Ventura
MANHATTAN — President Barack Obama came to Manhattan Thursday to take his crusade for tougher financial regulations to Wall Street's doorstep.
In a speech at Cooper Union in the East Village, Obama praised Wall Street for being at the "heart of the nation," but also chastised it for being overly reckless. He called for a series of reforms — to limit risks banks take on, govern trades of derivatives and other complex investment products and curtail executive pay — which have the Financial District gearing up for a fight.
Obama opened by saying it was good to be back in Lower Manhattan, in the shadow of the stock exchange, which drew skeptical laughter from the crowd.
"No, really, I am," the president insisted, smiling.
He said that "Wall Street is the heart of the nation," but cautioned that "a free market was never supposed to be a free license to take whatever you can get, whenever you can get it," slapping firms that had taken advantage of the system to profit while the economy tanked.
“Some on Wall Street forgot that behind every dollar traded or leveraged, there is family looking to buy a house, pay for an education, open a business, or save for retirement,” Obama said. "There is no dividing line between Wall Street and Main Street. We will rise or we will fall together."
Obama urged Wall Street and legislators to "join us, instead of fighting us in this effort."
The President also addressed limiting executive compensation and bringing government oversight to derivatives trading — controversial financial dealings which Warren Buffet called “financial weapons of mass destruction.”
Included in what Obama called "common sense reform" is legislation that will restrict the amount of risk banks can take on in order to protect taxpayers who have had to bailout companies deemed "too big too fail."
More than 700 people attended the president's speech, including several members of the financial industry as well as New York City politicians including Rep. Carolyn Maloney and Mayor Michael Bloomberg.
Bloomberg issued a stern warning following the speech, saying that several of the proposals in the financial reform legislation would lead to job losses across the board.
“My concern is for the police officers and firefighters, teachers and sanitation workers, and everyone else who lives in our neighborhoods, shops on our main streets, and keeps our City strong. They get paid by the taxes that the financial industry generates,” the mayor said at an afternoon press conference in Times Square.
Now that the health care bill has been signed, Obama has bumped financial regulation to the top of his to-do list. The speech occurred as the Senate was engaged in bi-partisan negotiation over the financial reform package.
Obama's reform plan has five main objectives: Protecting taxpayers when large financial firms fail; limiting the amount of risks taken on by banks; setting new transparency rules for derivatives and other complex financial instruments; stronger consumer protections; and giving investors more of a say in who runs firms and limiting executive pay.
Wall Street firms, however, are girding for battle.
Some of Manhattan's bold-faced names, including Goldman Sachs, JPMorgan Chase and Morgan Stanley, have pumped money to their lobbyists to blunt the bill, the Daily News reported. Goldman Sachs has shelled out $1.2 million in the first three months of the year, the News said.