Updated with comments from President Obama's speech in New York.
NEW YORK ( TheStreet) -- President Obama is totally overstating the MainStreet vs Wall Street conflict to scare Congress into passing new banking regulations.
"Some on Wall Street forgot that behind every dollar traded or leveraged, there is family looking to buy a house, pay for an education, open a business, or save for retirement," Obama said Thursday in New York.
That's got a nice populist ring to it, but it's not that simple. What about the value to MainStreet from all the money flowing into 401Ks and IRAs courtesy of a bank-led bull run in the markets?I'm sure Obama understands the nuances, but they aren't politically expedient. It's far more effective in Washington to have clear villains. So Obama's SEC delivered Goldman Sachs' (GS - Get Report) head on a platter with its fraud charges last week. It doesn't matter that the SEC's case against Goldman is lame, the public has been put on notice that banks can't be trusted. With the stage set, Obama is now in New York today, taking the fight straight to Wall Street. Just when it looked like Congress might waste a good crisis (as Rahm Emanuel, Hillary Clinton and other Obamanistas have become fond of saying), Obama is putting on a full-court press against banks. IMF Bank Proposals Face Hurdles (Forbes) Obama's timing is deliberate, arriving in New York just after the banks started getting good press with headlines like "Morgan Stanley's (MS - Get Report) Trading Business Delivers" and "JPMorgan's (JPM - Get Report) Success Raises Stakes". Even the oft-maligned poster child for the financial crisis, Citigroup (C - Get Report), posted a surprise profit. Obama took the opportunity to turn those profits into indictments, saying that "until this progress is felt not just on Wall Street but Main Street we cannot be satisfied. Until the millions of our neighbors who are looking for work can find jobs, and wages are growing at a meaningful pace, we may be able to claim a recovery - but we will not have recovered."