From NBC's Lauren Appelbaum
In his first substantive economic policy speech, Obama said Wall Street needs to be more transparent in order to earn the public's trust. Like he did in Detroit while talking to auto workers -- or to a teacher's union when advocating merit pay for teachers -- Obama did not shy away from criticizing the audience he was addressing. In fact, he asked investors to join him "in ushering in a new era of mutual responsibility in America."
"The quick kill is prized without regard to long-term consequences for the financial system and the economy," Obama said to an overflowing room at the NASDAQ market site. "And while this may benefit the few who push the envelope as far as it will go, it doesn't benefit America and it doesn't benefit the market. Just because it makes money doesn't mean it's good for business."
Obama cited the subprime mortgage crisis as an example of this problem. "In theory, this should have allowed mortgage lending to be less risky and more diversified," he said. "But as certain lenders and brokers began to see how much money could be made, they began to lower their standards... Far too many continued to put their own short-term gain ahead of what they knew the long-term consequences would be when those rates exploded. Those consequences are now clear: nearly 2.5 million homeowners could lose their homes."
Obama said there are four steps the country needs to take prevent future problems: (1) create more disclosure and accountability in the housing market by updating the current mortgage rules to prevent fraud and enact tough penalties against lenders who knowingly act in bad faith; (2) restore trust in the rating agencies by investigating the relationship and business practices of rating agencies and their clients; (3) fix a lack of transparency problem in other areas in the market by teaching consumers about the risk involved with credit cards; and (4) ask mortgage institutions to help people who are trying to sell or refinance their homes.
Invoking Franklin Roosevelt, Obama called for everyone, "from CEOs to shareholders, from financiers to factory workers," to work together because "we all have a stake in each other's success because the more Americans prosper, the more America prospers." He said the nation needs "another moment that requires, in FDR's words, a re-appraisal of our values as a nation."