The president stopped short of urging a return to the days when commercial banks just lent money and were locked out of investment activities. However, his proposal Thursday, likely to play well in the heartland, is designed to rein in what are viewed as Wall Street excesses.
Flanked by his economic team, congressional leaders and the towering former Federal Reserve Chairman Paul Volcker, who's long been urging much of what Obama announced, the president took aim at Wall Street, today's political pinata.
"While the financial system is far stronger today than it was one year ago, it is still operating under the exact same rules that led to its near collapse," Obama said.
"My resolve to reform the system is only strengthened when I see a return to old practices at some of the very firms fighting reform; and when I see record profits at some of the very firms claiming that they cannot lend more to small business, cannot keep credit card rates low and cannot refund taxpayers for the bailout. It is exactly this kind of irresponsibility that makes clear reform is necessary."
Financial markets didn't like what they heard. The Dow Jones industrial average cratered more than 224 points as the president concluded his speech. The Dow closed down 213.27 points to 10,389.88, its worst showing since Oct. 30.
But Wall Street critics welcomed Obama's proposal.
"The basic idea ... is a really, really good step," said Dean Baker, a co-director of the Center for Economic and Policy Research, a liberal research center.
It came just days after the Democrats lost a Senate seat in Massachusetts, as Obama strives to assure voters that he's siding with working people rather than the wealthy elite and searches for ways to redirect voters' anger away from him to others, such as big bankers.
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