Obama's Sunday Media Blitz: The CNN Transcript

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Obama’s Sunday Media Blitz: The Meet the Press Video/Transcript

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KING: Mr. President, thank you for joining us.

OBAMA: Great to see you.

KING: I want to begin with the economy. I get out of Washington every week for the show, and we’re in Connecticut and Rhode Island this week. And I knew I was going to be seeing you, so I asked 20 people: “What would you ask if you had the privilege that I have at this moment?” Eighteen of the twenty, eighteen, asked a variation of...

OBAMA: Jobs.

KING: ... where are the jobs? When are they coming back?

OBAMA: Yes. Well, look, the -- this is something that I ask every single one of my economic advisers every single day, because I know that ultimately the measure of an economy is, is it producing jobs that help people support families, send their kids to college? That’s the single most important thing we can do. What we’ve done, I think, in the first eight months is to stop the bleeding. We’ve...

KING: Is the recession over?

OBAMA: Well, you know, I’ll leave that up to the Fed chairman to pronounce whether it’s officially over or not. I think what’s absolutely clear is that -- that the financial markets are working again, that we even saw manufacturing tick up, in terms of production, last month. So all of the signs are that the economy is going to start growing again.

But here’s -- here’s the challenge, that not only are usually jobs figures the last to catch up, they’re the lagging indicator, but the other problem is, we lost so many jobs that making up for those that have already been lost is going to require really high growth rates.

And so what we’re focused right now on is, how can we make sure that businesses are investing again? How can we make sure that certain industries that were really important, like housing, are stabilized? How can we expand our export markets? And that’s part of what the G-20 meeting in Pittsburgh is going to be about, making sure that there’s a more balanced economy.

We can’t go back to the era where the Chinese or the Germans or other countries just are selling everything to us, we’re taking out a bunch of credit card debt or home equity loans, but we’re not selling anything to them.

So that’s how all this is going to fit together. But I want to be clear that probably the jobs picture is not going to improve considerably -- and it could even get a little bit worse -- over the next couple of months. And we’re probably not going to start seeing enough job creation to deal with the -- a rising population until some time next year.

KING: Do you think jobs will not grow, you will not be adding jobs until some time next year, or maybe...

(CROSSTALK)

OBAMA: No, I think -- I think we’ll be adding jobs, but you need 150,000 additional jobs each month just to keep pace with a growing population. So if we’re only adding 50,000 jobs, that’s a great reversal from losing 700,000 jobs early this year, but, you know, it means that we’ve still got a ways to go.

KING: Let’s talk health care. The Senate Finance Committee finally has a proposal before it by the chairman, Max Baucus . It’s getting some criticism from the left, some criticism from the right. I want to get to the details of it in a minute. It’s also getting some important praise from the middle. I want to break down some of the details in a minute. But if the Baucus bill made it to your desk as is, would you sign it? Does it meet your goals?

OBAMA: Well, that’s such a hypothetical, since it won’t get there as is, that I’m not going to answer that question. But can I say that it does meet some broad goals that all the bills that have been introduced meet.

KING: Is it better than the others?

OBAMA: It provides health insurance to people who don’t have it at affordable prices. I’d like to make sure that we’ve got that affordability really buttoned down, because I think that’s one of the most important things, is that if we’re offering people health insurance and we’re saying that people have to get health insurance if it’s affordable, we’ve got to make sure it’s affordable.

We’re helping people who have health insurance with the -- with knowing that, if they’re paying their premiums, they’re actually getting what they pay for, and that has been a huge problem, the people not able to get insurance because of pre-existing conditions, being surprised because some fine print says that they’ve got to pay huge out-of-pocket expenses or they hit a lifetime cap. All of those reforms are in there, and that’s really important.

Deficit neutrality, very important. Bending the cost curve, reducing health care inflation over time, part of the reason that’s so important, there was just a report that came out last week. Kaiser Family Foundation said, if you’ve got health insurance, last year, your premiums went up 5.5 percent, 5.5 percent. This is despite the fact that inflation was negative on everything else.

And that has been true almost every year. Premiums have doubled, gone up over 130 percent over the last 10 years. That’s the direction we’re heading. More and more people are finding that their employers are dropping their coverage, because it’s getting too expensive, so making sure that we’re controlling the long-term costs by improving the delivery systems, all of that’s in the bill.

Now, there are a whole bunch of details that still have to get worked out. I suspect you’ll have one or two questions about them. But what I’ll say is, is that right now I’m pleased that, basically, we’ve got 80 percent agreement, we’ve got to really work on that next 20 percent over the last few weeks.

KING: One of the issues is how to pay for it. And one of the things Chairman Baucus does -- and you have endorsed, at least in concept -- is putting a fee, slapping a fee on these so-called “Cadillac” insurance plans. And the fee would go on the insurance company, not on the individual.

OBAMA: That’s right.

KING: But as you know, many of your allies, Senator Rockefeller, other Democrats, and many union presidents who have helped you in this fight, say, you know what? That insurance company will pass that on to the consumer, and they think it’s a backdoor way potentially of violating your promise during the campaign to not raise taxes, not hurt middle-class Americans, because that will be passed back on through the back door.

OBAMA: Keep in mind that the average insurance plan, I think, is about $13,000, a little -- maybe a little more than that, because of health care inflation. Even the health care plan that members of Congress get is, you know, in that range of the teens. And so people would be, for the most part, completely unaffected by this.

You do have some Cadillac plans -- I mean, you know, the CEOs of Goldman, I think, published what their plans were worth. They were worth $40,000 or something like that. That’s probably leading to...

KING: Would you make sure...

OBAMA: ... some waste...

KING: I hate to interrupt, but would you make sure that -- some of these unions have negotiated pretty good plans, too. Would you...

OBAMA: Oh, absolutely.

KING: ... make sure theirs are carved out, or should some of them be subject to that?

OBAMA: This is a very important issue. I’ve been talking to the unions about it. I’ve been honest with them about it. What I’ve said is, is that the -- we want to make sure that guys are protected, guys and gals who have got a good benefit, that they are protected, but we also want to make sure that we’re using our health dollars wisely.

And I -- I do think that giving a disincentive to insurance companies to offer Cadillac plans that don’t make people healthier is part of the way that we’re going to bring down health care costs for everybody over the long term.

KING: It is not one of the central issues, but it has become one of the emotional flashpoints, and that is coverage of illegal immigrants. The Finance Committee plan is the only one in Congress right now that has specific language that says an illegal immigrant cannot go to one of these new health insurance exchanges. It requires documentation. Would you sign a bill without that documentation? Or is that an adamant red line for you?

OBAMA: Let me be clear. I think that, if I’m not mistaken, almost all of the plans had specific language saying that illegal immigrants would not be covered. The question really was, was the enforcement mechanism strong enough?

Here’s what I’ve said, and I will repeat: I don’t think that illegal immigrants should be covered under this health care plan. There should be a verification mechanism in place. We do that for a whole range of existing social programs. And I think that’s a pretty straightforward principle that will be met.

KING: Mitch McConnell told a conservative group: “We’re winning the health care debate.” What do you think of that?

OBAMA: Well, you know, they -- they were saying they were winning during the election, too.

(END VIDEOTAPE)

KING: Up next, we turn to global challenges, wrestling with sending more U.S. troops to Afghanistan, and a headline from former President Bill Clinton’s trip to North Korea. Much more with President Obama, next.

(COMMERCIAL BREAK)

KING: Afghanistan is now often referred to as Obama’s war and the strategy and decisions he faces in the coming weeks could well define his presidency. The American people have deep doubts about the mission and some of the president’s fellow Democrats see eerily parallels to Iraq in Afghanistan’s failure to build a more capable army and its government corruption and dysfunction. Defining the mission is perhaps the president’s biggest challenge.

(BEGIN VIDEOTAPE)

KING: Let me move on to the world stage. You face a very tough decision in the weeks ahead about Afghanistan. Our Pentagon correspondent, Barbara Starr, says she has been told that General McChrystal has finished his report and his recommendation to you, but he has been told, “Don’t call us; we’ll call you. Hold it.”

Are you or someone working for you asking him to sit on that at the moment because of the dicey politics of this?

OBAMA: No, no, no, no. Let -- let me describe the process from start to where we are now. When we came in, I think everybody understood that our Afghanistan strategy was somewhat adrift, despite the extraordinary valor of the young women -- men and women who are -- who are fighting there.

So what we said was, let’s do a soup-to-nuts re-evaluation, focusing on what our original goal was, which was to get Al Qaida, the people who killed 3,000 Americans.

To the extent that our strategy in Afghanistan is serving that goal, then we’re on the right track. If it starts drifting away from that goal, then we may have a problem.

What I also said was, we’ve got an election coming up. I ordered 21,000 troops in to secure that election. But I said, after the election’s over, we’ve got to review it, because we’ve got to figure out, what kind of partner do we have in Afghanistan? Are they willing to make the commitment to build their capacity to secure their own country?

We are in the process of working through that strategy. The only thing I’ve said to my folks is, A, I want an unvarnished assessment, but, B, I don’t want to put the resource question before the strategy question. You know, the -- because there is a natural inclination to say, if I get more, then I can do more. But right now, the question is, the first question is, are we doing the right thing? Are we pursuing the right strategy?

And -- and once I have that clarity from the commanders on the ground, Secretary Gates, my national security adviser, Jim Jones, and others, when we have clarity on that, then the question is, OK, how do we resource it? And that’s -- what I will say to the American public is not going to be driven by the politics of the moment. It’s going to be driven by the fact that, A, my most important job is to keep us safe -- and Al Qaida’s still trying to do us harm -- but, B, every time I sign an order, you know, I’m answerable to the parents of those young men and women who I’m sending over there, and I want to make sure that it’s for the right reason.

KING: On that point, about a month before the election, you promised a re-focused national security strategy. And you said, quote, “We will kill bin Laden. We will crush Al Qaida.” As president, commander-in-chief, are you finding it’s harder to find him than you thought it might have been as a candidate?

OBAMA: Oh, I think as a candidate I knew I was -- it was going to be hard. I don’t doubt the interest and the desire of the previous administration to find him and kill him. But I do think that, if we have a overarching strategy that reminds us every day that that’s our focus, that we have a better chance of capturing and killing him and certainly keeping Al Qaida on the run than if we start drifting into a whole bunch of other missions that really aren’t related to what is our essential strategic problem and rationale for being there.

KING: It is a small number, but a growing number of Democrats in the Congress who say they want a timeline, they want a time limit on U.S. troop commitments in Afghanistan. You thought that was a good idea when it came to Iraq. Is it a good idea for Afghanistan?

OBAMA: You know, I think that what we have to do is get the right strategy, and then I think we’ve got to have some clear benchmarks, matrix of progress. That’s part of the reason why I said, even after six months, I wanted us to re-evaluate. You know...

(CROSSTALK)

KING: What would you say to the American who says you’ve been president for eight months, why are you still looking for a strategy?

OBAMA: Well, no, no, no. Keep in mind that we have a -- we put a strategy in place, clarified our goals, but what the election has shown, as well as changing circumstances in Pakistan, is that, you know, this is going to be a very difficult operation, and we’ve got to make sure that we’re constantly refining it to keep our focus on what our primary goals are.

KING: Do you think President Karzai stole the election?

OBAMA: You know, I don’t think that, you know, I’m going to make comments on the election until after everything has been certified. I think there is no doubt that there were reports of fraud out there that at first glance look pretty serious. They’re being investigated. They’re going through the -- the normal processes.

How much fraud took place and whether that had a substantial effect on the results of the election, I think that is something that we’re going to have to wait and see in the next few weeks.

KING: A couple other quick security questions, and then I want to bring it back home. You recently had lunch with President Clinton. He went to North Korea to help facilitate the release of those American journalists. What is the most interesting thing he told you about Kim Jong-il?

OBAMA: You know, I think President Clinton’s assessment was that he’s -- he’s pretty healthy and in control. And that’s important to know, because we don’t have a lot of interaction with the North Koreans. And, you know, President Clinton had a chance to see him close up and have conversations with him.

I won’t go into any more details than that. But there’s no doubt that this is somebody who, you know, I think for a while people thought was slipping away. He’s reasserted himself. It does appear that he’s concerned about -- he was more concerned about succession when he was -- succession when he was sick, maybe less so now that he’s well.

But our -- but our main focus on North Korea -- and I’m very -- actually, this is a success story so far, and that is that we have been able to hold together a coalition that includes the Chinese and the Russians to really apply some of the toughest sanctions we’ve seen, and it’s having an impact.

OBAMA: And I think that North Korea is saying to itself, you know, we can’t just bang our spoon on the table and somehow think that the world is going to react positively. We’ve got to start behaving responsibly. So hopefully, we’ll start seeing some progress on that front.

KING: Seven former directors of central intelligence have sent you a letter saying, please invoke your authority to stop the attorney general’s investigation of the Bush-era interrogation tactics. Will you do that?

OBAMA: You know, first of all, I respect all seven of them. And as importantly or more importantly, I have absolute respect and have reliance upon a robust CIA.

And I’ve said before, I want to look forward and not backwards on this issue. On the other hand, I’ve also said nobody is above the law. And I don’t want to start getting into the business of squelching, you know, investigations that are being conducted.

Now, it’s not a criminal investigation as yet, my understanding. I trust career prosecutors to be judicious. I’ve made clear both publicly and privately that I have no interest in witch hunts. But, ultimately, the law is the law, and we don’t go around sort of picking and choosing how we approach it.

(END VIDEOTAPE)

KING: Ahead, angry outbursts and disturbing images in recent weeks have some on the left suggesting racism motivates some Obama critics. Does the president see race as the issue? I’ll ask him next.

(COMMERCIAL BREAK)

KING: How much, if at all, does our first African-American president believe race motivates his critics? Back to our conversation in the Roosevelt Room.

(BEGIN VIDEOTAPE)

KING: It’s a tough business, as you know. But in recent weeks, people have raised some pretty serious questions, the big rally in town, signs talking about Afro-socialism (ph), swastikas with your name and your picture on them, “you lie” shouted at you during a nationally televised addressed, and former President Carter says he sees racism in some of this. Do you?

OBAMA: You know, as I’ve said in the past, you know, are there people out there who don’t like me because of race? I’m sure there are. That’s not the overriding issue here. I think there are people who are anti-government.

I think that there are -- there has been a longstanding debate in this country that is usually that much more fierce during times of transition or when presidents are trying to bring about big changes.

I mean, the things that were said about FDR are pretty similar to the things that were said about me, that he was a communist, he was a socialist. Things that were said about Ronald Reagan when he was trying to reverse some of the New Deal programs, you know, were -- were pretty vicious, as well.

The only thing I’d just hope is, is that people -- you know, I think we can have a strong disagreement, passionate disagreements about issues without -- without resorting to name-calling. We can maintain civility. We can give other people the benefit of the doubt that -- that they want what is best for this country.

KING: But the speaker says it reminds her of the hateful anti- gay language in San Francisco that led to deadly violence. Jim Clyburn, who’s the highest-ranking African-American in Congress, says he thinks people are trying to de-legitimize you. Did you see it as that worrisome?

OBAMA: You know, I’ve got to tell you that, as I said before, you know, yelling at politicians is as American as apple pie. I mean, that’s -- that’s in our DNA. We -- I said this in the speech to the joint session, that we have a long tradition of being skeptical of government.

I do think that it’s important for us, again, to remind ourselves that all of us are Americans who love this country. I think it’s important not to exaggerate or provide just rank misinformation about each other.

You know, I’m amused. I can’t tell you how many foreign leaders who are heads of center-right governments say to me, I don’t understand why people would call you socialist, in my country, you’d be considered a conservative.

You know, and the other thing I’ve got to say is, is that I think it’s important for the media -- you know, not to do any media-bashing here -- to recognize that right now, in this 24-hour news cycle, the easiest way to get on CNN or FOX or any of the other stations -- MSNBC -- is to just say something rude and outrageous.

If you’re civil, and polite, and you’re sensible, and you don’t exaggerate the -- the bad things about your opponent, and, you know, you might maybe get on one of the Sunday morning shows, but -- but you’re not going to -- you’re not going to be on the loop.

And, you know, part of what I’d like to see is -- is all of us reward decency and civility in our political discourse. That doesn’t mean you can’t be passionate, and that doesn’t mean that you can’t speak your mind. But I think we can all sort of take a step back here and remind ourselves who we are as a people.

KING: I’m over my time. If I can, I want to ask you one question as a parent, not as a president. I was on a college campus this week and at a lab where they’re trying to make an H1N1 vaccine. As a parent with two daughters in school, how are you dealing with this? And does the Obama family plan include a vaccine for you?

OBAMA: Well, the -- here’s the Obama family plan, is to call up my HHS secretary, Kathleen Sebelius , and my CDC director and just ask them, what’s your recommendation? And whatever they tell me to do, I will do.

My understanding at this point is that the high-risk populations are going to be first with the vaccine, and that means not only health care workers, but particularly children with underlying neurological vulnerabilities. And so we’ve got to make sure that those vaccines go to them first.

OBAMA: I’m assuming -- and pregnant women, by the way -- after that, I think you’re looking at kids, and so Malia and Sasha would fall into that category. I suspect that I may come fairly far down the line, so we’re not going to -- here’s what I guarantee you. We want to get vaccinated. We think it’s the right thing to do. We will stand in line like everybody else. And when folks say it’s our turn, that’s when we’ll get it.

KING: Mr. President, thank you for your time.

OBAMA: Thank you so much.

KING: Thank you.

OBAMA: Appreciated it.

Video and Transcript: President Obama's Speech on The Economy (14 September)

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Thank you all for being here and for your warm welcome. It’s a privilege to be in historic Federal Hall. It was here more than two centuries ago that our first Congress served and our first President was inaugurated. It was here, in the early days of our Republic, that Hamilton and Jefferson debated how best to administer a young economy and to ensure that our nation rewarded the talents and drive of its people. Two centuries later, we still grapple with these questions – questions made more acute in moments of crisis.

It was one year ago that we experienced just such a crisis. As investors and pension-holders watched with dread and dismay, and after a series of emergency meetings often conducted in the dead of the night, several of the world’s largest and oldest financial institutions had fallen, either bankrupt, bought, or bailed out: Lehman Brothers, Merrill Lynch, AIG, Washington Mutual, Wachovia. A week before this began, Fannie Mae and Freddie Mac had been taken over by the government. Other large firms teetered on the brink of insolvency. Credit markets froze as banks refused to lend not only to families and businesses but to one another. Five trillion dollars of Americans’ household wealth evaporated in the span of just three months.

Congress and the previous administration took difficult but necessary action in the days and months that followed. Nevertheless, when this administration walked through the door in January, the situation remained urgent. The markets had fallen sharply; credit was not flowing. It was feared that the largest banks – those that remained standing – had too little capital and far too much exposure to risky loans. And the consequences had spread far beyond the streets of lower Manhattan. This was no longer just a financial crisis; it had become a full-blown economic crisis, with home prices sinking, businesses struggling to access affordable credit, and the economy shedding an average of 700,000 jobs each month.

We could not separate what was happening in the corridors of our financial institutions from what was happening on factory floors and around kitchen tables. Home foreclosures linked those who took out home loans and those who repackaged those loans as securities. A lack of access to affordable credit threatened the health of large firms and small businesses, as well as all those whose jobs depended on them. And a weakened financial system weakened the broader economy, which in turn further weakened the financial system.

The only way to address successfully any of these challenges was to address them together, and so this administration – with terrific leadership by my Treasury Secretary, Tim Geithner, as well the Chair of my Council of Economic Advisers, Christy Romer, and the Chair of the National Economic Council, Larry Summers – moved quickly on all fronts, initializing a financial stability plan to rescue the system from the crisis and restart lending for all those affected by the crisis. By opening and examining the books of large financial firms, we helped restore the availability of two things that had been in short supply: capital and confidence. By taking aggressive and innovative steps in credit markets, we spurred lending not just to banks, but to folks looking to buy homes or cars, take out student loans, or finance small businesses. Our home ownership plan has helped responsible homeowners refinance to stem the tide of lost homes and lost home values.

And the recovery plan is providing help to the unemployed and tax relief for working families, all while spurring consumer spending. It’s prevented layoffs of tens of thousands of teachers, police officers, and other essential public servants. And thousands of recovery projects are underway all across America, putting people to work building wind turbines and solar panels, renovating schools and hospitals, and repairing our nation’s roads and bridges.

Eight months later, the work of recovery continues. And although I will never be satisfied while people are out of work and our financial system is weakened, we can be confident that the storms of the past two years are beginning to break.

In fact, while there continues to be a need for government involvement to stabilize the financial system, that necessity is waning. After months in which public dollars were flowing into our financial system, we are finally beginning to see money flowing back to the taxpayers. This doesn’t mean taxpayers will escape the worst financial crisis in decades unscathed. But banks have repaid more than $70 billion, and in those cases where the government’s stake has been sold completely, taxpayers have actually earned a 17-percent return on their investment. Just a few months ago, many experts from across the ideological spectrum feared that ensuring financial stability would require even more tax dollars. Instead, we’ve been able to eliminate a $250 billion reserve included in our budget because that fear has not been realized.

While full recovery of the financial system will take a great deal more time and work, the growing stability resulting from these interventions means we are beginning to return to normalcy. But what I want to emphasize is this: normalcy cannot lead to complacency.

Unfortunately, there are some in the financial industry who are misreading this moment. Instead of learning the lessons of Lehman and the crisis from which we are still recovering, they are choosing to ignore them. They do so not just at their own peril, but at our nation’s. So I want them to hear my words: We will not go back to the days of reckless behavior and unchecked excess at the heart of this crisis, where too many were motivated only by the appetite for quick kills and bloated bonuses. Those on Wall Street cannot resume taking risks without regard for consequences, and expect that next time, American taxpayers will be there to break their fall.

That’s why we need strong rules of the road to guard against the kind of systemic risks we have seen. And we have a responsibility to write and enforce these rules to protect consumers of financial products, taxpayers, and our economy as a whole. Yes, they must be developed in a way that does not stifle innovation and enterprise. And we want to work with the financial industry to achieve that end. But the old ways that led to this crisis cannot stand. And to the extent that some have so readily returned to them underscores the need for change and change now. History cannot be allowed to repeat itself.

Instead, we are calling on the financial industry to join us in a constructive effort to update the rules and regulatory structure to meet the challenges of this new century. That is what my administration seeks to do. We have sought ideas and input from industry leaders, policy experts, academics, consumer advocates, and the broader public. And we’ve worked closely with leaders in the Senate and House, including Senators Chris Dodd and Richard Shelby, and Congressman Barney Frank, who are now working to pass regulatory reform through Congress.

Taken together, we are proposing the most ambitious overhaul of the financial system since the Great Depression. But I want to emphasize that these reforms are rooted in a simple principle: we ought to set clear rules of the road that promote transparency and accountability. That’s how we’ll make certain that markets foster responsibility, not recklessness, and reward those who compete honestly and vigorously within the system, instead of those who try to game the system.

First, we’re proposing new rules to protect consumers and a new Consumer Financial Protection Agency to enforce those rules. This crisis was not just the result of decisions made by the mightiest of financial firms. It was also the result of decisions made by ordinary Americans to open credit cards and take on mortgages. And while there were many who took out loans they knew they couldn’t afford, there were also millions of Americans who signed contracts they didn’t fully understand offered by lenders who didn’t always tell the truth.

This is in part because there is no single agency charged with making sure it doesn’t happen. That is what we’ll change. The Consumer Financial Protection Agency will have the power to ensure that consumers get information that is clear and concise, and to prevent the worst kinds of abuses. Consumers shouldn’t have to worry about loan contracts designed to be unintelligible, hidden fees attached to their mortgages, and financial penalties – whether through a credit card or debit card – that appear without warning on their statements. And responsible lenders, including community banks, doing the right thing shouldn’t have to worry about ruinous competition from unregulated competitors.

Now there are those who are suggesting that somehow this will restrict the choices available to consumers. Nothing could be further from the truth. The lack of clear rules in the past meant we had innovation of the wrong kind: the firm that could make its products look best by doing the best job of hiding the real costs won. For example, we had “teaser” rates on credit cards and mortgages that lured people in and then surprised them with big rate increases. By setting ground rules, we’ll increase the kind of competition that actually provides people better and greater choices, as companies compete to offer the best product, not the one that’s most complex or confusing.

Second, we’ve got to close the loopholes that were at the heart of the crisis. Where there were gaps in the rules, regulators lacked the authority to take action. Where there were overlaps, regulators often lacked accountability for inaction. These weaknesses in oversight engendered systematic, and systemic, abuse.

Under existing rules, some companies can actually shop for the regulator of their choice – and others, like hedge funds, can operate outside of the regulatory system altogether. We’ve seen the development of financial instruments, like derivatives and credit default swaps, without anyone examining the risks or regulating all of the players. And we’ve seen lenders profit by providing loans to borrowers who they knew would never repay, because the lender offloaded the loan and the consequences to someone else. Those who refuse to game the system are at a disadvantage.

Now, one of the main reasons this crisis could take place is that many agencies and regulators were responsible for oversight of individual financial firms and their subsidiaries, but no one was responsible for protecting the whole system. In other words, regulators were charged with seeing the trees, but not the forest. And even then, some firms that posed a “systemic risk” were not regulated as strongly as others, exploiting loopholes in the system to take on greater risk with less scrutiny. As a result, the failure of one firm threatened the viability of many others. We were facing one of the largest financial crises in history and those responsible for oversight were caught off guard and without the authority to act.

That’s why we’ll create clear accountability and responsibility for regulating large financial firms that pose a systemic risk. While holding the Federal Reserve fully accountable for regulation of the largest, most interconnected firms, we’ll create an oversight council to bring together regulators from across markets to share information, to identify gaps in regulation, and to tackle issues that don’t fit neatly into an organizational chart. We’ll also require these financial firms to meet stronger capital and liquidity requirements and observe greater constraints on their risky behavior. That’s one of the lessons of the past year. The only way to avoid a crisis of this magnitude is to ensure that large firms can’t take risks that threaten our entire financial system, and to make sure they have the resources to weather even the worst of economic storms.

Even as we’ve proposed safeguards to make the failure of large and interconnected firms less likely, we’ve also proposed creating what’s called “resolution authority” in the event that such a failure happens and poses a threat to the stability of the financial system. This is intended to put an end to the idea that some firms are “too big to fail.” For a market to function, those who invest and lend in that market must believe that their money is actually at risk. And the system as a whole isn’t safe until it is safe from the failure of any individual institution.

If a bank approaches insolvency, we have a process through the FDIC that protects depositors and maintains confidence in the banking system. This process was created during the Great Depression when the failure of one bank led to runs on other banks, which in turn threatened the banking system. And it works. Yet we don’t have any kind of process in place to contain the failure of a Lehman Brothers or AIG or any of the largest and most interconnected financial firms in our country.

That’s why, when this crisis began, crucial decisions about what would happen to some of the world’s biggest companies – companies employing tens of thousands of people and holding trillions of dollars in assets – took place in hurried discussions in the middle of the night. And that’s why we’ve had to rely on taxpayer dollars. The only resolution authority we currently have that would prevent a financial meltdown involved tapping the Federal Reserve or the federal treasury. With so much at stake, we should not be forced to choose between allowing a company to fall into a rapid and chaotic dissolution that threatens the economy and innocent people, or forcing taxpayers to foot the bill. Our plan would put the cost of a firm’s failure on those who own its stock and loaned it money. And if taxpayers ever have to step in again to prevent a second Great Depression, the financial industry will have to pay the taxpayer back – every cent.

Finally, we need to close the gaps that exist not just within this country but among countries. The United States is leading a coordinated response to promote recovery and to restore prosperity among both the world’s largest economies and the world’s fastest growing economies. At a summit in London in April, leaders agreed to work together in an unprecedented way to spur global demand but also to address the underlying problems that caused such a deep and lasting global recession. This work will continue next week in Pittsburgh when I convene the G20, which has proven to be an effective forum for coordinating policies among key developed and emerging economies and one that I see taking on an important role in the future.

Essential to this effort is reforming what’s broken in the global financial system – a system that links economies and spreads both rewards and risks. For we know that abuses in financial markets anywhere can have an impact everywhere; and just as gaps in domestic regulation lead to a race to the bottom, so too do gaps in regulation around the world. Instead, we need a global race to the top, including stronger capital standards, as I’ve called for today. As the United States is aggressively reforming our regulatory system, we will be working to ensure that the rest of the world does the same.

A healthy economy in the 21st Century also depends upon our ability to buy and sell goods in markets across the globe. And make no mistake, this administration is committed to pursuing expanded trade and new trade agreements. It is absolutely essential to our economic future. But no trading system will work if we fail to enforce our trade agreements. So when, as happened this weekend, we invoke provisions of existing agreements, we do so not to be provocative or to promote self-defeating protectionism. We do so because enforcing trade agreements is part and parcel of maintaining an open and free trading system.

And just as we have to live up to our responsibilities on trade, we have to live up to our responsibilities on financial reform as well. I have urged leaders in Congress to pass regulatory reform this year and both Congressman Frank and Senator Dodd, who are leading this effort, have made it clear that that’s what they intend to do. Now there will be those who defend the status quo. There will be those who argue we should do less or nothing at all. But to them I’d say only this: do you believe that the absence of sound regulation one year ago was good for the financial system? Do you believe the resulting decline in markets and wealth and employment was good for the economy? Or the American people?

I’ve always been a strong believer in the power of the free market. I believe that jobs are best created not by government, but by businesses and entrepreneurs willing to take a risk on a good idea. I believe that the role of government is not to disparage wealth, but to expand its reach; not to stifle markets, but to provide the ground rules and level playing field that helps to make them more vibrant – and that will allow us to better tap the creative and innovative potential of our people. For we know that it is the dynamism of our people that has been the source of America’s progress and prosperity.

So I certainly did not run for President to bail out banks or intervene in the capital markets. But it is important to note that the very absence of common-sense regulations able to keep up with a fast-paced financial sector is what created the need for that extraordinary intervention. The lack of sensible rules of the road, so often opposed by those who claim to speak for the free market, led to a rescue far more intrusive than anything any of us, Democrat or Republican, progressive or conservative, would have proposed or predicted.

At the same time, what we must do now goes beyond just these reforms. For what took place one year ago was not merely a failure of regulation or legislation; it was not merely a failure of oversight or foresight. It was a failure of responsibility that allowed Washington to become a place where problems – including structural problems in our financial system – were ignored rather than solved. It was a failure of responsibility that led homebuyers and derivative traders alike to take reckless risks they couldn’t afford. It was a collective failure of responsibility in Washington, on Wall Street, and across America that led to the near-collapse of our financial system one year ago.

Restoring a willingness to take responsibility – even when it is hard – is at the heart of what we must do. Here on Wall Street, you have a responsibility. The reforms I’ve laid out will pass and these changes will become law. But one of the most important ways to rebuild the system stronger than before is to rebuild trust stronger than before – and you do not have to wait for a new law to do that. You don’t have to wait to use plain language in your dealings with consumers. You don’t have to wait to put the 2009 bonuses of your senior executives up for a shareholder vote. You don’t have to wait for a law to overhaul your pay system so that folks are rewarded for long-term performance instead of short-term gains.

The fact is, many of the firms that are now returning to prosperity owe a debt to the American people. Though they were not the cause of the crisis, American taxpayers through their government took extraordinary action to stabilize the financial industry. They shouldered the burden of the bailout and they are still bearing the burden of the fallout – in lost jobs, lost homes and lost opportunities. It is neither right nor responsible after you’ve recovered with the help of your government to shirk your obligation to the goal of wider recovery, a more stable system, and a more broadly shared prosperity.

So I want to urge you to demonstrate that you take this obligation to heart. To put greater effort into helping families who need their mortgages modified under my administration’s homeownership plan. To help small business owners who desperately need loans and who are bearing the brunt of the decline in available credit. To help communities that would benefit from the financing you could provide, or the community development institutions you could support. To come up with creative approaches to improve financial education and to bring banking to those who live and work entirely outside the banking system. And, of course, to embrace serious financial reform, not fight it.

Just as we are asking the private sector to think about the long term, Washington must as well. When my administration came through the door, we not only faced a financial crisis and costly recession, we also found waiting a trillion-dollar deficit. Yes, we have had to take extraordinary action in the wake of an extraordinary economic crisis. But I am committed to putting this nation on a sound and secure fiscal footing. That’s why we’re pushing to restore pay-as-you-go rules, because I will not go along with the old Washington ways which said it was OK to pass spending bills and tax cuts without a plan to pay for it. That’s why we’re cutting programs that don’t work or are out of date. And that’s why I’ve insisted that health insurance reform not add a dime to the deficit, now or in the future.

There are those who would suggest that we must choose between markets unfettered by even the most modest of regulations – and markets weighed down by onerous regulations that suppress the spirit of enterprise and innovation. But if there is one lesson we can learn from the last year, it is that this is a false choice. Common-sense rules of the road do not hinder the markets but make them stronger. Indeed, they are essential to ensuring that our markets function, and function fairly and freely.

One year ago, we saw in stark relief how markets can err; how a lack of common-sense rules can lead to excess and abuse; how close we can come to the brink. One year later, it is incumbent on us to put in place those reforms that will prevent this kind of crisis from ever happening again; that reflect the painful but important lessons we’ve learned; and that will help us move from a period of recklessness and crisis to one of responsibility and prosperity. That is what we must do. And I’m confident that is what we will do.

Thank you.