US President Barack Obama has described the financial crisis as a "collective failure" of both Washington and Wall Street, and called for an overhaul of the financial system, in a speech to mark one year since the collapse of Lehman Brothers.
AFP - US President Barack Obama on Monday warned Wall Street it must not return to the "reckless behavior" and "unchecked excess" which he blamed for unleashing the global financial crisis.
The president, in a major economic speech at the heart of the mighty US financial system just blocks from the New York Stock Exchange, laid out a wide ranging prescription for rebuilding the US finance system.
He said the crisis was a "collective failure" of Washington, Wall Street and across America, vowed to press G20 powers for action on regulatory reform, and cautioned top executives not to squander public trust with huge bonuses.
One year after the fall of Lehman Brothers sparked global financial contagion, Obama warned that there were those in the finance industry who were misreading the lessons of the crisis.
"They do so not just at their own peril, but at our nation's," Obama said at historic Federal Hall in Manhattan.
"So I want them to hear my words: We will not go back to the days of reckless behavior and unchecked excess at the heart of this crisis, where too many were motivated only by the appetite for quick kills and bloated bonuses.
"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."
He also called on senior Wall Street moguls to promote a new culture of responsibility in their firms, before approving massive bonus payouts.
"You don't have to wait for legislation to put the 2009 bonuses of your senior executives up for a shareholder vote.
"You don't have to wait for a law to overhaul your pay system so that folks are rewarded for long-term performance instead of short-term gains."
The president said that in years leading up to the crisis, Washington had failed to properly regulate the finance industry, allied with reckless mortgage lending which had helped trigger the crisis.
"It was a collective failure of responsibility in Washington, on Wall Street and across America that led to the near-collapse of our financial system one year ago."
Days after slapping duties on Chinese tyres, in the first trade dispute of his administration with the Asian giant, Obama denied accusations of protectionism.
"When, as happened this weekend, we invoke provisions of existing agreements, we do so not to be provocative or to promote self-defeating protectionism, we do so because enforcing trade agreements is part and parcel of maintaining an open and free trading system."
Officials now predict a possible return to economic growth in the third quarter this year, a moment that will mark a political milestone for the administration.
Though the White House argues its policies are working, officials admit there is much economic pain to come -- and predict that even in recovery, unemployment will hit 10 percent.
Date created : 2009-09-14