Obama blasts banks' balking at more government controls

WASHINGTON - President Obama singled out financial institutions for causing much of the economic tailspin and criticized their opposition to tighter federal oversight of their industry.

While applauding House passage Friday of overhaul legislation, Obama expressed frustration with banks that were helped by a taxpayer bailout and now are "fighting tooth and nail with their lobbyists" against new government controls.

In his weekly radio and Internet address yesterday, Obama said the economy is only now beginning to recover from the "irresponsibility" of Wall Street institutions that "gambled on risky loans and complex financial products" in pursuit of short-term profits and big bonuses with little regard for consequences.

"It was, as some have put it, risk management without the management," he said.

The president also told CBS's 60 Minutes that "the people on Wall Street still don't get it. . . . They're still puzzled why it is that people are mad at the banks. Well, let's see. You guys are drawing down $10-, $20-million bonuses after America went through the worst economic year . . . in decades, and you guys caused the problem," Obama said in an excerpt released in advance of tonight's broadcast of his interview.

The House bill, which passed 223-202, would grant the government new powers to split up companies that threaten the economy, create an agency to oversee consumer banking transactions, and shine a light into shadow financial markets.

Obama is seeking swift approval in the Senate "because we should never again find ourselves in the position in which our only choices are bailing out banks or letting our economy collapse."

No House Republicans voted for the bill, and 27 Democrats voted against it. Opponents argue that the legislation overreaches and would institutionalize bailouts for the financial industry.

The Senate Banking, Housing and Urban Affairs Committee is working on its own version of the package.

In his address, Obama contended that the economic downturn wouldn't have happened if the rules governing Wall Street had been clearer and enforcement tougher.

Obama has scheduled a meeting tomorrow at the White House with financial-services-industry leaders to seek support for his effort to tighten federal oversight of the industry and to limit pay for top executives at institutions that accepted bailout money from the government.