Washington (AP) - Pushing Congress to act on proposed financial regulations, President Barack Obama is going to the heart of Wall Street on the first anniversary of Lehman Brothers' collapse to outline changes needed to prevent a future crisis like the one that sent the global economy into a tailspin last year.
Obama has called on Congress to pass a sweeping overhaul of how financial institutions behave but has seen slower-than-sought action. Administration officials said the president will use Lehman Brothers as a starting point to again decry a hands-off approach from Washington that enabled irresponsible lending that sent the nation's largest financial institutions to the brink of collapse and the larger economy to the edge.
White House spokesman Robert Gibbs said the president would focus on "the need to take the next series of steps in financial regulatory reform" -- in other words: Congress, stop stalling and get it done.
The speech comes as the same banks that received tens of billions of taxpayer dollars last year to stay afloat are again betting on the same bonds, commodities and exotic financial products that landed them in trouble.
There is, however, nothing Obama or Washington can do without Congress' action.
Proposals to better monitor the financial system and to police the products banks sell to consumers have been opposed by lobbyists, lawmakers and turf-protecting regulators. Mergers and sales of banks have consolidated lending power in even few hands. And those large firms still bet far more than the capital they have on hand.
Yet regulations have not moved. Much of the legislative motivation in Washington has been consumed by the contentious debate over changes to the health care system. Government intervention into private automakers such as General Motors have left lawmakers skittish to move further into corporate board rooms. And it's not as if another collapse is obviously imminent.
Five of the biggest banks -- Goldman, JPMorgan, Wells Fargo, Citigroup and Bank of America -- posted second-quarter profits totaling $13 billion. That's more than double what they made in the second quarter of 2008 and nearly two-thirds as much as the $20.7 billion they earned in the second quarter of 2007 -- when the economy was considered strong.
The failure of Lehman Brothers -- the biggest bankruptcy in U.S. history -- and the panicky sales of Bear Stearns to JPMorgan and Merrill Lynch to Bank of America transformed Wall Street and gave fewer competitors increased market power.
As of June 30, three banks -- JPMorgan, Wells Fargo and Bank of America -- held $2.3 trillion in domestic deposits, or $3 out of every $10 in deposit in the United States. Three years ago those three institutions held about 20 percent of the industry total.
Obama has sought tougher capital requirements for banks, arguing that banks' buying of exotic financial products without keeping enough cash on reserve was a key cause of the crisis. Treasury Secretary Timothy Geithner has urged the Group of 20 nations to agree on new capital levels by the end of 2010 and put them in place two years later.
The administration also has proposed increased transparency of markets in which banks trade the most complex -- and potentially risky -- financial products. Obama's broad plan also would give the Fed new oversight powers and impose conditions designed to discourage companies from getting too big.
Sen. Chris Dodd, the Democratic chairman of the Senate Banking Committee, is leading the push for those new rules and his aides hope to have legislation together before the year's end. Already they have conducted hearings on the source of the problem and how best to prevent another.
But one major component of the Obama plan -- creating an agency to oversee marketing financial products to consumers -- faces a tough road to become a law. Industry lobbying against it and other proposed financial rules has been fierce and the president's fellow Democrats have been slow to take up the cause.
President Barack Obama is going to the heart of Wall Street on the first anniversary of Lehman Brothers' collapse to outline changes needed to prevent a future crisis like the one that sent the global economy into a tailspin last year.