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Obama: Free Market, Not Free License

President Obama castigated Wall Street on Thursday and branded his party as sympathetic to Americans' financial strife during a speech in New York City.

Updated for added comments from the speech.



) -- President Obama castigated Wall Street in a speech in Manhattan on Thursday as he sought to brand his party as sympathetic to Americans' financial strife.

The president spoke shortly before noon at Manhattan's Cooper Union college, just a couple miles north of the financial district. Obama criticized Wall Street banks that devised ways to profit from the disaster on the upside and the downside - part of an effort to stir up support for his financial-reform bill, and midterm elections in November.

>>>Read the text of Obama's speech


A free market was never meant to be a free license to take whatever you can get, however you can get it," Obama told the audience, according to the transcript released by the White House. "That is what happened too often in the years leading up to the crisis. 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. What happens here has real consequences across our country."

The president also strived to separate himself and Democrats from special interests, noting the "furious efforts of industry lobbyists" to water down his reform proposal. He pointed out that those lobbyists work for audience members -- and implicitly the other side of the debate -- and urged them to stop "fighting us" in the effort to reshape the financial industry.

>>>Commentary: Obama's Misdirected Attack on Wall Street

Obama's speech comes at a critical time, as Congress hammers out a compromise on sticking points in the broad reform bill, slowly and incrementally. The House passed one version in December, while the Senate Banking Committee passed another version a few weeks ago. A key Senate panel passed a separate measure related to derivatives trading on Wednesday, but the entire Senate hasn't yet voted on a comprehensive package.

Once all that has been resolved, the two chambers must meld their individual bills together, a process that promises to be full of enmity. Republicans have been largely united in opposition to Democratic measures -- financial reform or otherwise -- and are digging their heels in for a fight.

The administration's effort to improve the financial markets and the economy has been mottled with scandals and criticism -- from hefty bonuses at bailed-out banks, to homeowner assistance and job recovery programs that have been panned as largely ineffective. While unemployment remains high, and the housing market is still in tatters, the country's six largest banks --

Bank of America

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JPMorgan Chase

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-- recently reported almost $19 billion worth of first-quarter profits. Those profits are due in part to taxpayer-financed bailouts, and $2 trillion worth of liquidity pumped into the system by the

Federal Reserve


Yet to win skeptical voters, Obama will seek to portray his actions thus far as correct, even if unpopular at times.

The president hearkened back to earlier speeches, in which he advised Congress to take certain actions to stabilize the financial system in order to stave off further pain on both Wall Street and Main Street.

He noted on Thursday that already more than eight million Americans have lost jobs since the start of the crisis, with "countless" small businesses having to shut down. Trillions of dollars' worth of wealth has evaporated as a result, hindering people's plans to succeed. But he also pointed out that job losses have finally abated, that the economy is growing and that "we are seeing hopeful signs."

Of course Obama's decisions and remarks haven't occurred in a vacuum; many economists and observers had been calling for the same reforms for bank balance sheets, accounting practices, consumer protection and other measures to stabilize the markets. Yet to the president's political advantage, his concerns then and the measures he continues to advocate seem even more relevant now.

"I take no satisfaction in noting that my comments have largely been borne out by the events that followed," the president said. "But I repeat what I said then because it is essential that we learn the lessons of this crisis, so we don't doom ourselves to repeat it."

Obama spent much of the speech laying out the major tenets of his reform proposal, namely the establishing of a process to handle the failure of large financial companies as well as ways to limit the size and activities of existing institutions, the need for greater transparency in the derivatives markets, and increased consumer protection measures. He also made a point of urging lawmakers to put "cynical politics" aside, saying that was the reason he was in New York to make the speech.

"We do not have to choose between markets unfettered by even modest protections against crisis, and markets stymied by onerous rules that suppress enterprise and innovation," he said. "That's a false choice. And we need no more proof than the crisis we've just been through."

-- Written by Lauren Tara LaCapra in New York