Obama Pushes Financial Plan As Bank Protests Grow

Oct 7, 2011
Originally published on October 7, 2011 3:01 pm

Loosely organized protests that began on Wall Street last month have spread to other U.S. cities, giving voice to what President Obama has called a broader frustration with the financial system. The Occupy Wall Street movement could also provide a boost for the policies he says will reform that system.

Bankers and their allies in Washington, D.C., have resisted calls to clean up their act — even after triggering the worst economic crisis since the Great Depression — Obama said in a White House news conference Thursday.

"You're still seeing some of the same folks who acted irresponsibly trying to fight efforts to crack down on abusive practices that got us into this problem in the first place," he said.

He defended the financial overhaul he signed into law last year. Among other things, that law sets up a new government watchdog agency, designed to protect consumers from risky or deceptive banking practices.

Earlier this week, Obama suggested that the agency might target the new $5-a-month fee that Bank of America plans to start charging its debit card customers. On Thursday, though, he made it clear that the agency doesn't have the power to prohibit such fees. It can only make sure they're spelled out clearly.

"Banks and any business in America can price their products any way they want. That's how the free market works," he said.

But even if it doesn't have the power to limit fees, the new watchdog agency remains a bone of contention in Congress. The Senate Banking Committee on Thursday approved Obama's nominee to head the agency, Richard Cordray. But a group of Senate Republicans has vowed to prevent Cordray or anyone else from being confirmed to the post because they don't like the way the agency is structured.

A year ago, Obama passed up the opportunity to nominate consumer champion Elizabeth Warren to head the watchdog agency, thereby avoiding a fight with Senate Republicans. Former investment banker Douglas Elliott, who monitors financial regulations at the Brookings Institution, said this time the White House appears ready for battle.

"When the White House picked Cordray, they knew the Republicans would filibuster him. So they must have made the calculation that politically it was better for them to say, 'They wouldn't accept Warren. They won't accept this guy. They won't accept anybody until we do things their way,' " Elliott said.

That calculation is backed up by public opinion polls. Two surveys this summer, commissioned by consumer groups, found broad support for the new watchdog agency, as well as the broader financial overhaul. In his news conference, Obama tried to align himself with that sentiment while painting GOP rivals as beholden to Wall Street.

"You've got Republican presidential candidates whose main economic policy proposal is, we'll get rid of the financial reforms that are designed to prevent the abuses that got us in this mess in the first place," he said. "That does not make sense to the American people. They are frustrated by it."

Hoping to capitalize on that frustration, the Democratic National Committee released a video montage this week, showing GOP presidential hopefuls Mitt Romney, Newt Gingrich, Rick Perry and Jon Huntsman campaigning against the year-old financial overhaul, known as Dodd-Frank.

Former investment banker Elliott says Democrats are banking on a simple idea: "Everyone hates bankers right now."

If that's right, then the White House could lose the confirmation battle for its watchdog director, and still gain ground in a larger political struggle.

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LYNN NEARY, host: This is MORNING EDITION from NPR News. I'm Lynn Neary.

RENEE MONTAGNE, host: And I'm Renee Montagne. As the protest movement known as Occupy Wall Street grows, President Obama is seeing an opportunity. The protesters are gaining momentum in places like Washington, D.C. and California. Some were arrested here in Los Angeles yesterday when they tried to enter a branch of the Bank of America. The president is trying to channel that anger with banks into support for his financial policies, as NPR's Scott Horsley reports.

SCOTT HORSLEY: President Obama says the protesters in lower Manhattan and elsewhere are giving voice to a broader frustration with the nation's financial system. He says even after triggering the worst economic crisis since the Great Depression, bankers and their allies in Washington have resisted calls to clean up their act.

President BARACK OBAMA: You're still seeing some of the same folks who acted irresponsibly trying to fight efforts to crack down on abusive practices that got us into this problem in the first place.

HORSLEY: In a White House news conference yesterday, Mr. Obama defended the financial overhaul he signed into law last year. Among other things, that law sets up a new government watchdog agency designed to protect consumers from risky or deceptive banking practices. Earlier this week, Mr. Obama suggested that agency might target the new $5 a month fee that Bank of America plans to start charging its debit card users. Yesterday, though, the president made it clear the agency doesn't have the power to prohibit such fees. It can only make sure they're spelled out clearly.

OBAMA: Banks and any business in America can price their products any way they want. That's how the free market works.

HORSLEY: But even if it doesn't have the power to limit fees, the new watchdog agency remains a bone of contention in Congress. The Senate Banking Committee yesterday approved Mr. Obama's nominee to head the agency, Richard Cordray. But a group of Senate Republicans has vowed to prevent Cordray or anyone else from being confirmed to the post, because they don't like the way the agency is structured.

A year ago, Mr. Obama passed up the opportunity to nominate consumer champion Elizabeth Warren to head the watchdog agency, thereby avoiding a fight with Senate Republicans.

Former investment banker Douglas Elliott, who monitors financial regulations at the Brookings Institution, says this time the White House appears ready for battle.

DOUGLAS ELLIOTT: When the White House picked Cordray, they knew the Republicans would filibuster him. So they must have made the calculation that politically it was better for them to say they wouldn't accept Warren, they won't accept this guy, they won't accept anybody until we do things their way.

HORSLEY: That calculation is backed up by public opinion polls. Two surveys this summer, commissioned by consumer groups, found broad support for the new watchdog agency, as well as the broader financial overhaul. In his news conference, Mr. Obama tried to align himself with that sentiment, while painting GOP rivals as beholden to Wall Street.

OBAMA: You've got Republican presidential candidates whose main economic policy proposals is we'll get rid of the financial reforms that are designed to prevent the abuses that got us in this mess in the first place. That does not make sense to the American people. They are frustrated by it.

HORSLEY: Hoping to capitalize on that frustration, the Democratic National Committee released a video montage this week showing GOP presidential hopefuls Mitt Romney, Newt Gingrich, Rick Perry, and Jon Huntsman campaigning against the year-old financial overhaul known as Dodd-Frank.

(SOUNDBITE OF VIDEO)

MITT ROMNEY: Do we need Dodd-Frank?

CROWD: No.

ROMNEY: We do not need Dodd-Frank and I will get rid of it if I'm president of the United States.

NEWT GINGRICH: They ought to come back in and repeal the Dodd-Frank bill that's killing the banking industry now.

RICK PERRY: Dodd Frank is strangling the small community banks across America. It needs to be repealed.

JON HUNTSMAN: We cannot go forward with Dodd-Frank.

HORSLEY: Former investment banker Elliott says Democrats are banking on a simple idea...

ELLIOTT: Everyone hates bankers right now.

HORSLEY: If that's right, then the White House could lose the confirmation battle for its watchdog director and still gain ground in a larger political struggle. Scott Horsley, NPR News, Washington. Transcript provided by NPR, Copyright NPR.