On the heels of the commemoration of the Sept. 11, 2001, terrorist attacks, President Obama ventured to Wall Street on Monday to recall another epochal event, last year's collapse of Lehman Brothers, which triggered a panic that threatened the global financial system.
After recounting the government's extraordinary intervention to stabilize the system and unfreeze credit markets, Obama warned the financiers that "we will not go back to the days of reckless behavior and unchecked excess. ... 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."
The president touted plans to increase capital cushions at big banks, give the Federal Reserve new powers to oversee systemwide financial risks and establish a new consumer-protection agency with broad powers over mortgages and other consumer loans.
But the administration has yet to flesh out its proposals, especially the higher capital requirements for banks, the most effective check on their risky lending. Loopholes mar its plan to regulate derivatives, the arcane instruments that contributed mightily to the financial meltdown. And some experts question whether the Fed, which turned a blind eye to reckless financial practices before the crisis hit, is best suited to oversee systemic risk.
With Congress engrossed in debate over health-care reform it's doubtful that it can expeditiously consider new regulation of the financial markets. Moreover, the Wall Street players are assiduously lobbying to temper the reform impulse to protect their practices and profits.
Their clout -- with both parties -- makes it unlikely that the lessons of the financial meltdown of 2008 will be heeded, which means there may indeed be a "next time" for the taxpayers to bail out the captains of capitalism.