Mortgage woes show Wall St reform crucial: Obama

WASHINGTON Sat Oct 23, 2010 6:28pm EDT

1 of 3. A foreclosed home is shown in Chicago June 29, 2010.

Credit: Reuters/John Gress

WASHINGTON (Reuters) - President Barack Obama said the home foreclosure crisis underscored the importance of his Wall Street reforms, and he blasted Republicans on Saturday for "beating the drum" to roll back the regulatory overhaul.

"Recently, we've seen problems in foreclosure proceedings -- mistakes that have led to disruptions in the housing markets. This is only one more piece of evidence as to why Wall Street reform is so necessary," Obama said in his weekly radio address, 10 days before November 2 congressional elections in which his fellow Democrats are expected to sustain sharp losses.

The address marked Obama's most extensive comments on the foreclosure mess since revelations first surfaced of faulty paperwork.

He has been trying to walk a delicate line on the foreclosure issue. The White House believes the problems highlight a contrast with Republicans opponents of the landmark Wall Street reform package the Democratic Congress passed in July.

But Obama has stopped short of backing calls for a nationwide moratorium on home foreclosures -- something the White House fears could worsen the housing crisis.

The financial reform law was aimed at preventing a repeat of the 2007-2008 financial meltdown that set off the worst U.S. recession in generations.

Though analysts see little chance the financial reform law would be fully rolled back, opponents are targeting specific provisions, such as funding for a new consumer watchdog.

Obama said the new watchdog, known as the Consumer Financial Protection Bureau, "will have the authority to guard against unfair practices in mortgage transactions and foreclosures."


Repeating a theme of recent campaign speeches for Democratic candidates, Obama said Republicans' opposition to regulatory reform showed they work for special interest groups, not middle-class Americans.

Wall Street reform is one of Obama's more popular legislative accomplishments, given Americans' anger over financial sector profits and bonuses while the country wrestles with 9.6 percent unemployment and other effects of a weak economy.

"This was a bill designed to rein in the secret deals and reckless gambling that nearly brought down the financial system," Obama said.

"Some in the financial industry were eager to protect a status quo that basically allowed them to play by their own rules. And these interests held common cause with Republican leaders in Washington who were looking to score a political victory in an election year," he said.

"Top Republicans in Congress are now beating the drum to repeal all of these reforms and consumer protections," Obama said.

Allegations of faulty foreclosure paperwork and demands banks buy back billions of dollars in mortgages sold to investors have raised fears financial firms face a new wave of difficulties similar to the 2007-2008 crisis.

Critics say the failure to fix the housing finance system in general, and mortgage giants Fannie Mae and Freddie Mac in particular, is a gaping hole in the Wall Street reform law.

Republicans say they don't oppose financial regulation but say the bill should have been structured differently.

"Everyone wants to hold Wall Street accountable and make sure that the irresponsibility that led to the terrifying crisis of 2008 never, ever happens again, but the law that Washington Democrats passed doesn't do that," said Michael Steel, spokesman for House of Representatives Republican leader John Boehner.

(Editing by Jerry Norton and Stacey Joyce)

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Comments (10)
JackMack wrote:
Unfortunately for Mr. Obama, the truth about Dodd-Frank’s financial “reform” legislation is that it cements the financial industry’s ability to “play by their own rules,” and it reveals plainly that both Republicans and Democrats hold common cause with the thieves on Wall Street and beyond.

The Dodd-Frank legislation should be thrown out in favor of comprehensive regulatory restructuring that focuses on three principles: honesty, transparency, and simplicity. First and foremost, we must make fraud illegal for institutions just as it is for people. We must have the authority and power to punish firms that commit fraud, and we must use that power judiciously.

Capitalism is founded entirely on the assumption that all parties in a transaction have access to accurate information. This is the principle that everyone seems to have forgotten, or stopped caring about.

Of course, I will not be holding my breath waiting for Mr. Obama or his cronies, nor Mr. Boehner and his cronies, to take on anything like meaningful financial reform. They are all pigs at the same trough, and they all smell pretty much the same.

Oct 23, 2010 6:36am EDT  --  Report as abuse
cranston wrote:
Regional stock exchanges based in cities outside of New York would be preferable to ‘Wall Street Reform’. Big banks, stockbrokers and the exchanges on Wall Street to be disbanded.

Oct 23, 2010 7:02am EDT  --  Report as abuse
Please do not insult us, Mr. President. It is the Congress that needs overhauling. They passed the laws that allowed this mortgage mess to occur in the first place. Back when Mr. Clinton was president, the US was all about putting every American in a home. Laws were adopted that gave the lending institutions the freedom to approve loans based on nothing.

Wall Street paid attention and saw the money that could be made by bundling those loans and selling them as AAA investments to anyone who thought they could make a killing when those loans came due.

The Congress of this country truly needs to begin to act in the best interest of its citizens. Don’t place the blame on Wall Street, they do not have the power to pass laws. By the way, it was a collective effort of Democrats and Republicans that passed those ridiculous laws, not one side or the other. Some of us DO pay attention, Mr. President. You just keep doing your job of being a politician because your colleagues in the Congress are depending on you. I am not.

Oct 23, 2010 7:44am EDT  --  Report as abuse
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