President Barack Obama launched an onslaught against banks and Republicans this for working to block financial reform, using a populist tone amid public anger over Wall Street practices.
Obama, a Democrat who is fighting for re-election in 2012 against a backdrop of high unemployment, said his Republican opponents' primary plan to boost the economy involved rolling back Wall Street regulation his administration fought to pass.
The president also pressed Congress to approve his $447 billion jobs package and said he was comfortable with a proposal by fellow Democrats to pay for the plan with a tax on millionaires. John Boehner, Republican speaker of the House of Representatives, accused Obama of political campaigning.
Obama spoke at a White House news conference after thousands of anti-Wall Street demonstrators continued protesting in New York's financial district and in several other U.S. cities this week over economic inequality and financial institutions' power.
I think people are frustrated and ... the protesters are giving voice to a more broad-based frustration about how our financial system works, Obama said.
What we've seen over the last year is not only did the financial sector with the Republican Party and Congress fight us every inch of the way, but now you've got these same folks suggesting that we should roll back all those reforms and go back to the way it was before the crisis.
Obama noted the Dodd-Frank financial reform bill he championed was designed to prevent Wall Street abuses, and his emphasis on the subject indicated he would use the theme heavily in the 2012 presidential race.
Banks, he said, can't be competing on the basis of hidden fees, deceptive practices, or, you know, derivative cocktails that nobody understands and that exposed the entire economy to enormous risks.
Vice President Joe Biden and a U.S. Federal Reserve official also expressed sympathy for the protesters, but some investors said Obama's populist tone was misplaced.
If these statements were coming from a lowly congressman, that's one thing, but this is the president. It's class warfare at its finest, or at its worst, said Marshall Front, chairman of Front Barnett & Associates, which has $600 million in assets and owns bank stocks.
Populism and Politics
The Bank of America Corp. said last week it planned to charge customers who use debit cards to make purchases a $5 monthly fee. Obama said recent hikes in fees charged by banks were likely unfair to consumers. He said it was appropriate for the government to play an oversight role.
The depth of that oversight is as much a political issue as it is a financial one.
You've got Republican presidential candidates whose main economic policy proposals is, 'We'll get rid of the financial reforms that are designed to prevent the abuses that got us into this mess in the first place,' Obama said.
That does not make sense to the American people. They are frustrated by it, and they will continue to be frustrated by it until they get a sense that everybody's playing by the same set of rules.
House Speaker Boehner said Obama had given up on the country to focus on his re-election rather than working with Republicans to boost the economy.
Mr. President, why have you given up on the country and decided to campaign full time instead of doing what the American people sent us all here to do? Boehner said.
Though criticizing Wall Street can tap into populist support, it could hurt Obama's campaign pocketbook. Like other presidential candidates, Obama is courting Wall Street contributions for his political goals.
Obama already has a tenuous relationship with some in the financial community for his harsh rhetoric about corporate compensation at the beginning of his term.
It is pretty clear that the Obama 2012 campaign is going to try to take up the theme of economic populism -- how they [Obama and Biden] are the only ones standing in the way of the banks and corporations taking over Washington, said Paul Sracic, a political scientist at Youngstown State University in Ohio.
New York-based protests over income inequality have spread to other U.S. cities. They were under way or planned on Thursday in Austin, Texas; Tampa, Fla.; Washington, and Houston.
We have a very frustrated people, and I can understand their frustration, Richard Fisher, president of the Federal Reserve Bank of Dallas, told a group of business people in Fort Worth, Texas.
We have a very uneven distribution of income. We have too many people out of work for too long.
Jobs Sales Pitch
During his White House news conference, which lasted more than an hour, Obama continued a sales pitch for his jobs package, saying it was necessary to avoid another recession.
Republicans say the proposal -- a mix of stimulus spending and tax cuts for workers and small businesses, plus an end to some tax breaks for corporations and the rich -- will never pass as a whole, but that certain parts are worth considering.
Some Democratic lawmakers are also not fans of the bill. In response, Senate Majority Leader Harry Reid said he would substitute a new millionaire's tax for some of the tax hikes Obama had proposed to win more support.
Nevertheless, Republicans are still expected to block the measure in the Democratic-controlled Senate, and it faces stiff opposition in the Republican-controlled House of Representatives.
(Additional reporting by Matt Spetalnick, John O'Callaghan, Kim Dixon, Jason Lange, Patricia Zengerle, Thomas Ferraro, Joseph Rauch, and Malathi Nayak; writing by Jeff Mason; Editing by Philip Barbara and Paul Simao)