Obama’s Speech on Financial Reform hit its Mark, Albeit Grudgingly

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President Obama Speaking at Federal Hall on Wall Street
President Obama Speaking at Federal Hall on Wall Street
President Obama today delivered sort of a lecture on financial reform to a mixed Wall Street crowd of fund managers, elected officials and business advocacy groups. The president’s remarks were made on the one-year anniversary of the Lehman Bothers collapse at Federal Hall in New York City.

There’s no doubt that much has changed since last September. At the time, several of the world’s largest and oldest financial institutions had fallen, either bankrupt, bought or bailed out. Credit markets froze and panic ensued as five trillion dollars of household wealth evaporated. America truly was on the verge of a financial collapse, at least in sentiment.

These days there is a light at the end of the proverbial tunnel. Much of the TARP money borrowed by banks has been repaid at a profit to the American taxpayer, and the Dow Jones Industrial Index is on an upswing from its historic lows earlier this year. So why risk recovery with reform?

Strike while the iron is hot. Few would disagree that the country needs financial reform. The same goes for healthcare. Greed not only by Wall Street, but Main Street too, is at the root of this current financial crisis. The only way for a full recovery is through reform.

President Obama’s tough talk warning the financial community that the days of “reckless behavior and unchecked excess” are over comes at a pivotal time during the nation’s history. Most Americans (70%) lack confidence that the federal government has taken safeguards to prevent another financial industry meltdown. The president instead invited Wall Street to join in a wide scale effort to dramatically change the rules and regulatory structure of the financial industry.

Whether Wall Street will help reform itself remains to be seen. Change is inevitable however. The financial markets must restructure its current environment or face another collapse. This is the simple truth we learned from the real estate and technology bubbles. The real challenge will come when a turnaround is imminent, profits are up and the money starts to roll again on Wall Street.

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