US President Barack Obama has hit out at Wall Street “fat cats”, expressing anger that banks bailed out by the government plan huge bonuses while millions of Americans battle poverty and unemployment.
“I did not run for office to be helping out a bunch of fat cat bankers on Wall Street,” Obama said Friday in excerpts of an interview with CBS television to be aired on Sunday.
With unemployment still hovering at around 10 percent, amid a recession triggered in part by the excesses of financial institutions, Obama voiced frustration that “some people on Wall Street still don’t get it.”
Lavish pay and bonuses on Wall Street have been blamed for encouraging the excessive risk-taking that with the subprime mortgage housing crisis fueled the global maelstrom and brought the US financial sector to the brink of collapse a year ago.
That prompted the US administration to unveil a rescue package topping 700 billion dollars, in part to shore up troubled institutions.
A so-called pay czar, appointed by the government, has since reviewed compensation at bailed-out firms and in most cases has restricted salaries to 500,000 dollars a year.
But several of the nation’s largest banks such as Bank of America have already repaid the billions of dollars they were given by the US Treasury under the Troubled Asset Relief Program, or TARP..
Only two major banks still hold US government capital from the program: Wells Fargo, which received 25 billion dollars, and Citigroup, with some 45 billion dollars.
Obama told CBS he believed some banks had paid back all the bailout funds in order to escape government controls regulating such things as bonuses.
“They’re still puzzled why it is that people are mad at the banks. Well, let’s see. You guys are drawing down 10, 20 million dollar bonuses after America went through the worst economic year… in decades and you guys caused the problem.
“These same banks who benefited from taxpayer assistance who are fighting tooth and nail with their lobbyists… up on Capitol Hill, fighting against financial regulatory control,” Obama added.
On Friday, the US House of Representatives approved the most sweeping regulatory overhaul of the financial sector since the Great Depression of the 1930s, one of Obama’s key goals.
Lawmakers voted 223-202 to pass the 1,300-page legislation, a package of measures Obama’s Democratic allies crafted in response to the global financial meltdown of 2008.
The legislation gives regulators the power to dismantle giant financial firms and lays out a systematic way to unwind them in case of collapse that ensures shareholders and unsecured creditors, not taxpayers, bear the losses.
It also reinforces the powers of the Securities and Exchange Commission to detect irregularities that could provide an early warning of fraudulent investment schemes, like the fraud perpetrated by Wall Street swindler Bernie Madoff.
But the legislation is now expected to move to the US Senate in 2010, where it faces stiff opposition from the financial industry and its Republicans allies, not one of whom voted in favor of the plan.
Democratic House Speaker Nancy Pelosi has described the measure as a clear warning to Wall Street that “the party is over.”
“American families will no longer be at the mercy of Wall Street in terms of their jobs, their homes, their pension security, the education of their children,” Pelosi said Thursday.
It has drawn fierce opposition though from the financial sector and Republicans, who accuse the bill of stifling innovation with weighty new rules.
The number two House Republican, Representative Eric Cantor, said the legislation “frightens people and creates uncertainty in the American economy, preventing job growth.”
But on Saturday, Obama blasted collusion between congressional Republicans and Wall Street lobbyists who he believes have forged an alliance to block stronger government regulation of the financial sector.
“Just last week, Republican leaders in the House summoned more than 100 key lobbyists for the financial industry to a ‘pep rally’, and urged them to redouble their efforts to block meaningful financial reform,” the president said in his weekly radio address.
However, the Treasury Department told AFP on Friday it had no plans to follow in the footsteps of Britain and France and impose a one-off 2009 tax on bankers’ bonuses.
Asked if the United States was planning to follow moves unveiled this week by Britain and France for “community” taxes on bankers bonuses, Treasury spokeswoman Meg Reilly said in an email: “Not at this time.”
This video was published by the White House on Saturday, Dec. 12, 2009.