Fresh from a landmark health care victory, President Barack Obama on Monday trained his sights on sweeping reforms of Wall Street's "too-big-to-fail" banks. Obama - who is expected Tuesday to sign health care legislation that will overhaul one sixth of the economy - was joined by key lieutenants in pressing for a similar remake of the banks blamed for dragging the economy to the brink.
In the Senate, Obama ally Christopher Dodd pushed a 1000-plus page finance reform package through his powerful banking committee, while Treasury Secretary Timothy Geithner appeared at a conservative think tank to call for reform. Dodd's key committee passed the bill without Republican support in a 13 to 10 vote, paving the way for a full Senate vote and leaving Dodd - who will retire by the end of 2010 - to promise reform by year's end.
The bill would introduce a slew of Wall Street reforms, creating a potentially powerful consumer financial protection agency, placing checks on executive bonuses and curbing risky investments. The White House quickly moved to welcome passage of the bill, which Obama said would help ensure "the American taxpayer never again pays the price for the irresponsibility of our largest banks and financial institutions."
Obama vowed to continue to fight to strengthen the measures as they move to the full Senate in the coming weeks. Geithner, whose legacy as treasury secretary will likely depend on the recovery from banking-induced crisis, told the American Enterprise Institute "financial reform is not a war of choice; it is a war of necessity."
He also vowed to fight opponents of reform, who he alleged were spending over one million dollars a day to neutralise the package, which would also create a committee with the power to break up "too-big-to-fail" banks. Geithner warned lawmakers the passage of the bill would be a "test of our capacity as a nation to deal with complex and consequential problems."
"If we fail to act, America will lose this opportunity to set the global agenda," he cautioned. The American Bankers Association on Monday denied opposing reform but said the current bill would "reduce the ability of our industry to support the economy."
Still, with widespread popular support for reform, the Obama White House may also see an easy next legislative target, particularly with Congress plagued by partisanship after the health care vote. In an ABC World News poll released Monday, 77 percent of Americans said the financial industry had not done enough to atone for its role in the economic crisis.
With Democrats likely to paint Republican health care opposition as pro-industry, Republicans may be reluctant to cast their lot with despised bankers ahead of this year's midterm elections, according to Douglas Elliot of The Brookings Institution.
"The politics are very different than for health care reform. The public is demanding action, although the area is too technical for them to know exactly what they want," he said. "It is not clear that there are 41 senators who would be willing to stand up and filibuster a bill when that action would be portrayed as siding with the bankers."
After Monday's vote Dodd's long-time interlocutor in the Republican Party, Bob Corker - who voted against the bill - sounded an optimistic tone about the prospect of bipartisan support for reform. "(I) hope that there is still an opportunity to produce a sound piece of legislation that will merit broad bipartisan support from the full Senate and stand the test of time," he said.
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