President Barack Obama, marking a year since Lehman Brothers collapsed, urged financial firms on Monday not to fight regulatory reform and called on Congress to pass his proposals by the end of the year.
Obama, who has focused most of his energy on healthcare reform in recent weeks, used his speech to highlight another top priority of his administration -- overhauling financial rules to prevent another collapse.
While the economy and the financial system are showing signs of recovery, Obama warned against using that as an excuse to avoid reform.
Normalcy cannot lead to complacency, he said at the historic Federal Hall in the heart of Wall Street.
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're still recovering, they're choosing to ignore those lessons.
Financial reform will be a key issue at a G20 summit of leading developed and developing nations in Pittsburgh next week but progress on Obama's agenda has been slow.
Obama's speech also sought to show other countries his administration is serious about tackling weaknesses and excesses in the U.S. financial system that are blamed for setting off the global crisis.
As the United States is aggressively reforming our regulatory system, we're going to be working to ensure that the rest of the world does the same, he said.
Under a proposal put forward in June, the Federal Reserve would get new powers to monitor big financial firms and a new consumer protection agency would be created.
Many of the provisions are controversial and the legislation has bogged down in Congress, possibly delaying reforms until 2010 or resulting in a watered-down package.
Obama told financial firms not to wait for a law to pass before they started making reforms, urging them, for example, to put 2009 senior executive bonuses up for shareholder votes.
Alan Lancz, president of Ohio-based investment advisory firm Alan B. Lancz & Associates Inc, said Wall Street was wary of too much regulation.
It could really restrict our progress, growth and our economic system, he said, reacting to Obama's speech.
Obama said there would be no return to the days of reckless behavior and that Wall Street could not expect further taxpayer bailouts without repercussions.
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, he said.
One lawmaker at the center of efforts to overhaul U.S. financial rules said the legislation will be completed.
We are very much on track, Barney Frank, chairman of the House of Representatives Financial Services Committee, said on Monday. This will be done.
The Treasury Department said on Monday the U.S. financial system remained fragile and that withdrawing stimulus measures had to be done carefully to avoid disrupting a nascent recovery.
The stock market has rebounded in the last eight months, with the Dow index at 9,586.90 points on Monday afternoon, about 1,305 points higher than its close at 8,281.22 points on the last trading day before Obama took office on January 20.
Still, unemployment has worsened significantly. The joblessness rate was 7.6 percent in January but hit 9.7 percent in August and is expected to stay high well into next year.
(Additional reporting by Jeff Mason, Patricia Zengerle and Ellis Mnyandu; Editing by John O'Callaghan and David Storey)