NEW YORK — President Barack Obama rebuked Wall Street for risky practices Thursday, even as he sought its leaders' help for "updated, commonsense" banking regulations to head off any new financial crisis.
"Ultimately, there is no dividing line between Main Street and Wall Street. We rise or we fall together as one nation. So I urge you to join me," he said in a high-stakes speech near the nation's financial hub. His audience included some of the nation's most influential bankers.
The president acknowledged differences of opinion over how to best protect bailout-weary taxpayers, but he denounced criticism from some Republicans who claim that a Democratic-sponsored bill headed for Senate action would encourage rather than discourage future bailouts of huge banks.
"That makes for a good sound bite, but it's not factually accurate. It is not true," Obama said to scattered applause. "In fact, the system as it stands — the system as it stands is what led to a series of massive, costly taxpayer bailouts." He said the overhaul legislation would put a stop to such bailouts.
Obama's speech came at a delicate time in negotiations over the Senate measure, which could be debated next week. The House has passed its own version of financial overhaul legislation. Obama did not say which he favored but told an audience that included dozens of financial leaders that "both bills represent significant improvement on the flawed rules we have in place today."
Obama portrayed his appearance at Cooper Union college, in lower Manhattan, as a reprise of a campaign speech he gave at the same location in March 2008 to offer an agenda for financial regulatory reform.
"Since I last spoke here two years ago, our country has been through a terrible trial," he said, pointing to the loss of more than 8 million jobs and "countless small businesses," trillions of dollars in lost savings and a situation in which people have been forced to put off retirement or postpone college.
Taking his argument for stronger oversight of the financial industry to the city where the economic meltdown began, Obama said it is "essential that we learn the lessons of this crisis, so we don't doom ourselves to repeat it. And make no mistake, that is exactly what will happen if we allow this moment to pass."
The U.S. Chamber of Commerce took out full-page ads in New York papers recognizing a need for reforms but criticizing provisions of the current legislation. "Mayor (Michael) Bloomberg has pointed out that beating up on Wall Street may be good short-term politics — but not if it gets in the way of right solutions," the chamber said in its "Open Letter to the President."
Bloomberg — who has expressed reservations about the overhaul legislation — was in the audience of about 700 financial industry leaders, consumer advocates, presidential advisers, local officials, students, faculty and others for Obama's speech.
Obama spoke for about 25 minutes in the college's Great Hall. The crowd response to his words was more polite than enthusiastic. But, he said, "Unless your business model depends on bilking people, there is little to fear from these new rules."
Sponsors still hold out hope that the Senate measure will draw some cautious Republican support. Senate negotiators say they have made progress toward a compromise bill that could command support from both sides.
At the same time, Senate Majority Leader Harry Reid, D-Nev., moved to set up a procedural test vote on Monday if bipartisan negotiations fail to yield an agreement.
"The games of stalling are over," he told reporters Thursday.