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Tuesday
Sep152009

UPDATED Iran: Complete Text of Karroubi Letter to The Iranian People (14 September)

Iran: English Translation of Judiciary Report on Karroubi Allegations
The Latest from Iran (14 September): Countdown to Friday

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UPDATE 15 September: We're now posting the translation provided by Evan Siegel on his site "Iran Rises". The original summary translation by an Iranian activist via Twitter follows below that:

KARROUBI323 Shahrivar 1388/September 14, 2009

In the name of God, the Merciful, the Compassionate.

To the Noble and History-Making Nation of Iran.

As you know, Your Servant during the days following the elections stormy events have passed these last three months for this country and this system. Letters of admonition and information were written one after the other to the officials in the hope that there would be an opening and lest rights be trampled and there be oppression and the suffering and sighs of the oppressed would seize our skirts and not release them. For as we know from religion’s counsel and history’s experience, “The realm survives in unbelief but does not survive in oppression.” [In Arabic.]

Three months have passed for our country, but what three months! In our ninth presidential elections we slept for an hour and woke up, it was as if we had fallen into the sleep of those of the Seven Sleepers2 everything was changed. But in the recent presidential elections, as I have said before, staying awake until dawn would not have done any good, since the ugliness had passe from stealing by night to the point of highway robbery. But this was not the beginning of the matter. I could never have foreseen the day that in the Islamic Republic the people’s calm and peaceful demonstrations would be answered as they were. The people’s questions and confusion about the fate of the votes they had cast were answered, but not with proof and logic, but with bullets and batons and clubs and beating. I saw everything which was far from the expected, scenes which re-awoke memories of my youth. As time passed and events unfolded, though, other news came, of torture and astonishing deeds from within nameless detention centers, news which increased the astonishment of myself and every other observer. People came and reported or presented documents and offered witness about what they had undergone during their days in prison.

My God, what did Mehdi Karoubi see and hear? Amazing! If only I was not alive and had not seen the day that in the Islamic Republic, a citizen would come to me and complain that every variety of appalling and unnatural act would be done in unknown buildings and by less known people: Stripping people and making them face each other and subjecting them to vile insults and urinating in their faces and releasing boys and girls with their hands and eyes bound into the wilderness. It was not long after that reports also arrived of the rape of girls and boys in the detention sites. I said to myself, “Where indeed have we arrived three years after the revolution and two months after the Imam’s death?”

It was natural that our zeal would be aroused. I wrote that reports of rape and torture and the practice of unnatural acts were arriving and I ask you, without my prejudging the matter, to investigate and learn if these disasters have occurred or not. This letter was published. But the reply was a hue and cry and insults and threats rained down on me. Friday preachers used their Friday prayer tribunes to say whatever they could against me and attribute things to me in a coordinated effort originating from the administration’s orders. As this happened, my doubts became more grave. I said to myself, “If such disasters had not occurred, they would have said so. But such unnatural attacks from the tribunes, large and small, of Friday prayers and such unnatural insults from some of the press show that some fire had landed on a number of people’s crops. I saw myself as duty-bound to stand up and not abandon the field.

Read rest of translation....


The summary translation of "PersianBanoo" (14 September)

As you know, I as your servant have written several letters to the authorities about the post-election events. I could have never predicted that in the Islamic Republic, they would answer people's peaceful demonstrations with batons and bullets. I witnessed the unthinkable on the streets and alleyways. I saw scenes that reminded me of my younger years.

As time passed, I heard the news of torture in the prisons and unthinkable acts in unnamed and unknown detention centres and unknown buildings and by unknown people. Detainees were treated with shameful and indecent acts, from making prisoners sit naked across each other, urinating on their faces, to releasing young girls and boys handcufffed in outskirts of the city. As though these were not enough, I started hearing reports of rapes. Three decades after the Revolution and two decades after Imam [Khomeini]'s passing, what have we become?

So I wrote a letter to the authorities asking for an investigation into these matters. Their answer was bombarding me with slanders and threats. The Friday Prayer Imams, by order, across the country slandered me. I told myself, if such atrocities had not happened they should just deny them, but instead from Friday Prayer tribunes and their media they attacked me, so I decided to stand firm.

For example I told them about a person who had been raped. Judicial authorities arranged a meeting. They interrogated this person in two sessions. After the second session, this person told me, "These people are after something else."

The prosecutor had asked this person to go to the medical examiner's office. I told him to do it. They continued interrogating this person and told him he should have remained silent for his own and his family's sake and he should have not allowed some politician to use him. A few days later this young man came to me and said they have gone to his parents and neighbours questioning them. He said his parents didn't know about the rape and his father has been crying since. The boy left and I didn't hear from him anymore.

Last Tuesday his father came to visit me saying he is worried for his son. He said, "We are good Muslims, why are they doing this to us?" He said, "They have talked to all our neighbors and shopkeepers around us." He said that they ring his doorbell constantly and then disappear. He said he has seen a big guy on a motorcycle filming his house.

What they did to this witness became a lesson for me not to introduce any more witnesses to the prosecution.

The second case I brought to their attention with documents was a young girl who had been arrested during a demonstration. She says they played with and touched her breasts in the car on the way to the detention centre. At the centre the interrogators had asked her to remove her pants. She refused. While she was on the floor, the pants were removed. As she was screaming for help, the higher-rank officer came in to enquire. The agents said to him, "This girl has taken her own pants off and is trying to dishonor us."

The third case was a young person who was a member of a legal political party The parents contacted me. They already had a CD made & had the medical examiner's report. This person did not claim he was raped. He said he had passed out during the hard beating he received and does not know what they did to him. He had swelling and redness of the rectum area. The medical examiner confirmed the redness and swelling of the rectum area and suggested the Justice Department should do further investigation on this matter. This person spent five days in detention and was beaten badly. This person was told they were moving him to Evin [Prison], but released him handcuffed and blindfolded outside the city limits.

I had documents for these three cases that I presented to the judicial panel. I verbally informed them of two others. The first was Taraneh Mousavi. I told them her family would not talk to me and asked them to do further investigation to find the truth. The witness to Taraneh's case has also said her family would not talk to him/her. We witnessed the interview of the fake parents of the fake Taraneh on TV. They had told the fake family not to be concerned with anything and they will take care of everything

Apparently Mehdi Karroubi's crime was that he had revealed Taraneh's case, which is similar to the chain murders case. This caused the closing of my newspaper Etemade Melli.

I told them Taraneh's case as I had heard it. Taraneh and friends were arrested in front of Qoba mosque [probably on 28 June]. The girls decided to pass phone numbers to each other so whoever was released earlier could inform families. During the transfers between places, one girl realized Taraneh was not among them. This girl, after her release, contacted Taraneh's family and the authorities to inform them that Taraneh was missing. Apparently Taraneh's mother was quite scared and told this girl not to contact her anymore. I asked the three-member panel to investigate this case and find the truth behind all of this.

[Then Karroubi goes thru a lot of discussion of Saeedeh Pouraghai, saying he realized she was not the daughter of a martyr and explains his conversations with Saeedeh's stepsister. He also talks about finding out that this girl has been a runaway. He than talked about giving all information on Saeedeh and asks the panel to investigate further.

He then talks of an incident about a girl that had been arrested during a demonstration. The girl told him she and another girl had been raped in a van on the way to the detention centre. The girl asked Karoubi not to reveal her identity for if her parents find out she will commit suicide.

Karroubi also talks about the case of a nurse with similar stories whose information and picture he did not release. He says the nurse had been raped and she still had bruises on her body.

Karroubi than talks about how well the meeting went with the three-member panel and how they parted happily....]

The very next day, instead of investigating all of these matters I brought to their attention, they arrested [Alireza] Beheshti and [Morteza] Alviri, seized documents from my office and the Etemade Melli party office.

Now that I am quickly preparing this report, I know they just tried to close the mater somehow and fast. They claim I had no evidence and my charges were baseless. The three-member panel has asked the Justice Department to file charges against me. Do they not know that at the end people will do their own judgement and will decide who is telling the truth?
Tuesday
Sep152009

Middle East Inside Line: Lebanon's Jumblatt Seeking Iran Support?; Preparing for Showdown at UN

walid-jumblatt-1Lebanon's Jumblatt Pursuing Iran Link? Opposition MP Walid Jumblatt, the leader of Lebanon's Druze community, told Iran's Press TV on Saturday that Lebanon should be armed by Tehranan against the possibility of an Israeli aggression against Lebanon. He said: "They (Israelis) are not hiding that, they are saying we will attack or we will one day come to Lebanon again."

Jumblatt added: "We need anti-tank weapons and anti-aircraft weapons....Americans are not really willing to provide us with such weapons. They will tell you these weapons will be used against Israelis. OK, but my enemy is Israel."

Jumblatt called for the unity of the Arab world through dialogue between Saudi Arabia, Egypt and Iran, as well as between the Arab League and Iran. This unity between the Shiite and Sunni blocks could bring an end to Israel's "aggression."

Preparing for the UN Show: There have already been vehement discussions at the United Nations General Assembly in advance of next week's speeches by national leaders. Libyan diplomat Ali Treki is taking over the UNGA Presidency from Nicaraguan President Miguel d'Escoto Brockman, as it is reported that Libyan leader Muammar Gaddafi will attend the Assembly next week after the release of the Lockerbie bomber, Abdelbaset al-Megrahi by Scottish officials.

Iranian President Mahmoud Ahmadinejad's 23 September speech is also being discussed in diplomatic circles. The World Jewish Congress has launched a campaign on to convince leaders to boycott the address. The organization is also ciruclating a petition to the General Assembly which individuals can sign and send to UN officials.

Meanwhile, Brockman left the Presidency with a swipe at the "world powers [who] curbed him from aiding Palestinians." Brockman said, "My greatest frustration this year has been the Palestine situation," and added:
I wanted to help Palestine, but those who should supposedly have been most interested denied their support for reasons of "caution" that I was incapable of understanding.

He blamed the permanent five members of the Security Council (United States, Britain, France, China and Russia) of being "passive and apparently indifferent" on the Israeli blockade of Gaza in the past two years and called their behavior "disgraceful".
Monday
Sep142009

The Latest from Iran (14 September): Countdown to Friday

NEW Iran: The Rafsanjani Statement on Qods Day
Latest Iran Video: The Allegations of Detainee Abuse
Iran: The Protest Goes On
Iran: English Translation of Judiciary Report on Karroubi Allegations
Iran: The Soroush Letter to the Supreme Leader
The Latest from Iran (13 September): Lull — Storm?

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IRAN TRIALS 72110 GMT: On the day after Grand Ayatollah Montazeri denounced Iran's "military state", his three grandsons --- Mohammad Mehdi, Mohammad Ali Montazeri, and Mohammad Sadegh --- have been arrested.

2045 GMT: Over to You. What do you think Hashemi Rafsanjani is intending for Qods Day? We've posted a translation of his statement today, including his reference to "an absolutely illegitimate, fraudulent, and usurping Government".

1910 GMT: Got It in One. Our prediction at 1450 GMT: "the Speaker of the Parliament asked Karroubi to please refrain from taking to the streets this Friday on Qods Day, promising in return a genuine Parliamentary review of the claims of detainee abuse."

From Rouydad News: "Larijani asked Karoubi to keep quiet for a while. Karoubi said I will die but I won't keep quiet."

1830 GMT: Did Rafsanjani Just Bless the (Green) Cause? Our sharp readers will have noted our caution in the previous entry. While Hashemi Rafsanjani had asked Iranians to march on Friday, he had referred to the cause of Palestine.

The Internet is buzzing, however, with the reading that the former President has now signalled that he is with the opposition. The key sentence? The Iranian version of "It is always darkest just before dawn".

1738 GMT: The website of the Supreme Leader has denied the claim that Hashemi Rafsanjani, in a talk with Ayatollah Khamenei, threatened to resign all his positions if Mehdi Karroubi was arrested.

1735 GMT: Report that Majid Nayeri of the Mojahedin-Enghelab party was released Sunday night after 89 days in prison.

1730 GMT: Hashemi Rafsanjani has issued a statement calling on people to march on Qods Day, ostensibly for the "Palestinian cause".

1450 GMT: More on the Ali Larijani-Karroubi meeting (1100 GMT). Reports indicate the discussion lasted two hours and both sides agreed not to reveal details.

For what it's worth, I'm speculating that the Speaker of the Parliament asked Karroubi to please refrain from taking to the streets this Friday on Qods Day, promising in return a genuine Parliamentary review of the claims of detainee abuse.

1410 GMT: Mehdi, Mir Hossein, Hashemi, We'll Take All of You On. Fars News is featuring three articles on today's Tehran trials. Two are the detailed recitations of Karroubi and Mousavi computer-whizzes trying to take out the system with a "velvet coup". The other, however, deserves a moment's attention: Hashemi Rafsanjani's son, Mehdi Hashemi, is the accused culprit trying to ensure a Mousavi "victory".

1345 GMT: Khomeini --- He Once Led the System, Right? Because his family sure are giving the regime a rough time. There's the lawsuit against Kayhan newspaper (1305 GMT), yesterday's warm reception for the freed Alireza Behesti, and now the pictures are out of an equally effusive greeting for the released activist Mohammad Reza Jalaeipour.

1335 GMT: The Clerical Challenge. From this morning's analysis: "If Karroubi remains a presence and if senior clerics continue their challenge to the legitimacy of the Presidency, then the wave [of resistance] will come ashore again and again."

We've featured Karroubi already (1315 GMT). Now for the senior clerics via a letter from Grand Ayatollah Montazeri, claiming that the Islamic Republic is no longer a system led by religious tenets but a "military state".

1325 GMT: Parleman News reports that General Mohammad Moghaddam, head of the Veterans’ Section of Mir Hossein Mousavi’s election campaign, was released on Friday night. Moghaddam had been arrested on Tuesday as part of the crackdown on Mousavi and Karroubi staff investigating charges of detainee abuse.

1315 GMT: Karroubi's "Bring It On". More news to add to our morning analysis "The Protest Goes On". Mehdi Karroubi has offered a pointed response to the three-member judiciary panel that has rejected his evidence on abuse of detainees and the threat to arrest him. He has written to the Iranian people, describing the post-election events that led him to protest through his letter, initially sent to Hashemi Rafsanjani. An Iranian activist has a running summary in English on Twitter.

1305 GMT: Back after a break to an avalanche of news. The Financial Times of London reports that the Imam Khomeini Institute, run by Ayatollah Ruhollah Khomeini's grandson Hassan, has filed a complaint against Kayhan newspaper over an editorial that alleged that the Khomeini household was infiltrated by “riotous agents”.

1110 GMT: Meanwhile, the Engagement is On; the Nuke Deadline is Off. The European Union's Javier Solana and Saeed Jalili, the Secretary of Iran's National Security Council, have decided after a morning phone call, to meet on 1 October, well after President Ahmadinejad's forthcoming in NewYork City.

An EA correspondent: "The venue of the Solana-Jalili meeting is not clear, but it appears that United Nations General Assembly meeting, as well as Obama's informal September deadline, can now be classified as irrelevant in the nuclear battle between Iran and the West."

1100 GMT: What is Ali Larijani Saying to Mehdi Karroubi? The Speaker of the Parliament is meeting this afternoon with Karroubi at the Parliament building; Qodratollah Alikhani, the secretary-general of Karroubi's Etemade Melli party, is also in attendance.

The meeting was requested by Larijani. So a question, from an EA correspondent, "Has he been ordered by the Supreme Leader to instill some 'reason' into Karroubi?

0940 GMT: Oops. Much credit to The New York Times for persisting in coverage of the internal Iran situation when others have walked away (CNNWatch: six days and counting since their website had a story). Unfortunately, this morning's article by Nazila Fathi on the release of chief Mousavi advisor Alireza Beheshti goes astray: "[He] has been released in what appears to be a sign of retreat by the hard-core conservative authorities running Iran."

Retreat? I would love to concur but, pre-Qods Day and amidst a new trial, the threats against Mehdi Karroubi, and arrests of other activists, this is more a re-drawing of battle lines (see our separate analysis).

0930 GMT: Prediction Fulfilled (Within Two Hours). From our morning analysis: "The regime can now offer token concessions on investigations — a few officials reprimanded for Kahrizak prison, a prominent prisoner released on bail — while maintaining control of the process." Well, this just in from Press TV:
The Iranian judiciary panel looking into post-election events says its work is not over, despite having rejected claims that prisoners were sexually abused. "The three-member panel is still active. Its first report was about claims made by [Mehdi] Karroubi," Iran's Chief Prosecutor Gholam-Hossein Mohseni-Ejei said during a Sunday night televised interview.

“However, the panel is still investigating other issues such the [attack on Tehran] University dormitories and the events that took place in Kahrizak [prison],” added the prosecutor, who is one of the three panel members.

0825 GMT: New Media and Old Journalists. A happy coincidence to replace my unhappiness with the recent column by Roger Cohen mis-understanding New Media and reducing the Iranian people to helpless bystanders. Mahasti Afshar has a must-read corrective, "Twitter is Now All I Have", in The Huffington Post.

0815 GMT: Reuters, drawing on the Iranian Republic News Agency account, has noted the trial. There are six defendants today, including activist Abdollah Momeni. Fars continues to offer the fullest account, now aiming at the "IT staff of Mir Hossein Mousavi".

0705 GMT: The 5th Tehran trial has begun, and here are the buzzwords, courtesy of Fars News: "velvet coup", "psychological warfare", and "cyber-space pathology".

The prosecution's rhetoric is familiar and, to be honest, a bit tiresome. This, however, raises an eyebrow on the Iran Government's perception of the power of social media (are you reading, Roger Cohen?): "25 million Iranian users use the network site Facebook and have been able to contact 200 million people in cyberspace". Some Iranian media had used these networks for "agitation" of "incorrect actions".

0655 GMT: The story this morning is likely to be the 5th Tehran trial of post-election detainees. The symbolism is clear, after last week's high-profile attacks on Mousavi and Karroubi campaigns and attempts to quash any investigation of the abuse of detainees: We're in Charge Here.

Yet, for all the drama of its move, the Government --- at least in my view --- has not succeeding in quashing the Green opposition. We've posted a special analysis, "The Protest Goes On".

The Government's confrontation with the opposition still has some carrot on the stick. One piece of news from yesterday that we wanted to confirm: the human rights lawyer Mohammad Ali Dadkhah has been released on $500,000 bail.
Monday
Sep142009

Iran: The Rafsanjani Statement on Qods Day

The Latest from Iran (14 September): Countdown to Friday

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Posted by MikVerbrugge:

RAFSANJANIIt has been 30 years since Free Thinkers and Enlightened Seekers of Justice followed the call of Imam Khomeini and went on the streets to protest the occupation of Jerusalem, which has become a symbol for the oppression and assault of oppressed people by an absolutely illegitimate, fraudulent, and usurping Government.  They made their displeasure known in the face of the horrendous crimes and injustice of a certain minority wanting an international totality [of power]. We witness how the shouts of protest and this meaningful participation is like an earthquake shaking the web-like foundations of tyranny & oppression, healing the wounded body of noble Islam.

People in Islamic Iran and other Muslim countries of the world will be commemorating this day while the world's oppressive leaders are abusing the dispute among the Mujahidin of Islam, sinking their teeth into the dispute of the fighters of Palestine itself, by spreading religious and social discord.

God forbids us, interpreting this most important day...[and] denouncing oppression, to cause it to be forgotten in midst of these disputes. That would pour water into the mills of those who have always intended to erase this common holy place from Islam.

God willing, Your unprecedented great presence in Islamic and non-Islamic countries, in all cities and villages of our dear Iran will be shedding light on the Overlooked, who think that the passing of time has covered up the Palestine issue. And To You I Say: The Night Is Darkest Before Sunrise.
Monday
Sep142009

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.