NEW YORK (TheStreet) -- President Obama took his message to Wall Street on Monday, telling banks that they can expect his regulatory reform proposals to pass and that they should cooperate with his objectives out of duty to taxpayers.

The audience responded warmly, but some attendees and locals are certainly gearing up for a fight.

"The reforms I have laid out will pass, and these rules will become law," Obama said Monday afternoon, at Federal Hall, just steps from the New York Stock Exchange.

The president's appearance comes nearly a year after regulators, some of whom remain in his administration, allowed Lehman Brothers to fail. Obama used the anniversary as an opportunity to push his agenda of hands-on regulation, with tighter capital rules, more prudent risk management, scaled-back executive pay and more transparency in the market for derivatives.

Obama also touched on the proposal that stands to get the most industry push-back, a consumer-protection agency that oversees the marketing and sales of financial products. He criticized banks for providing consumers with documents that are "designed to be unintelligible."

Wall Street has fought most of those ideas, adopted some of its own accord and found routes around others.

Banks already have begun adjusting pay packages to avoid scrutiny by, for instance, raising the base salary of executives rather than giving stock and performance-based awards, as bonuses have become a thorny issue. Now in cash-preservation mode, they are already gearing up for the implementation of stronger capital rules that the G-20 group of nations may adopt within a few years.

They also agreed to provide information about most derivatives trades. If banks provide such data collectively, it won't hurt the competitive edge of anyone, and perhaps prevent the rout that brought American International Group (AIG) - Get Report (Stock Quote: AIG) down.

But while banks are cooperating out of necessity -- and are being sued or criticized for their marketing of all sorts of products, from mortgages and credit cards to money market funds and auction-rate securities -- they would rather handle the issues on their own. Industry groups are pushing back against the consumer protection agency idea, saying it unnecessarily duplicates the efforts of agencies that already exist, and makes it more expensive and tougher for firms to operate. Those groups represent banks that finance the campaigns of lawmakers on financial committees, meaning any proposal which passes likely will be watered down.

(AIG) - Get Report When times were bad, the government's $700 billion rescue plan was deemed necessary. The feds were condemned for letting Lehman collapse, fueling a market panic, while implementing steps to assist competitors.

(AIG) - Get Report But now that times are good, banks want the government to step out of the way. Firms like Goldman Sachs (GS) - Get Report (Stock Quote: GS), Morgan Stanley (MS) - Get Report (Stock Quote: MS) and JPMorgan Chase (JPM) - Get Report (Stock Quote: JPM) already have repaid bailout funds. Bank of America (BAC) - Get Report (Stock Quote: BAC) and Wells Fargo (WFC) - Get Report (Stock Quote: WFC) are moving ahead with plans to do so. Citigroup (C) - Get Report is further back, but turned to profitability last quarter. In fact, while Morgan lost $1.3 billion last quarter, the others earned a combined $13 billion.

How times have changed.

(AIG) - Get Report (GS) - Get Report (MS) - Get Report (JPM) - Get Report (BAC) - Get Report (WFC) - Get Report (C) - Get Report Outside Federal Hall, hundreds of onlookers pressed against police barriers along the sidewalks at the corner of Wall, Nassau and Broad Streets. Many were there in hopes of catching a glimpse of the president, while others mistakenly believed he would deliver his speech from the steps of Federal Hall.

The onlookers stood in near silence, as quiet as a gallery at a golf tournament. Two placards rose above their heads. One said, "Wall Street Reform First" and the other: "Laid Off Today ... 9:30 ... Hire Me."

(AIG) - Get Report (GS) - Get Report (MS) - Get Report (JPM) - Get Report (BAC) - Get Report (WFC) - Get Report (C) - Get Report As the president was quickly whisked away in a motorcade, one spectator, who declined to give his name, urged him to throw more resources behind financial reform.

"The task in hand now is saving the world from Wall Street; health care reform can wait," he said.

(AIG) - Get Report (GS) - Get Report (MS) - Get Report (JPM) - Get Report (BAC) - Get Report (WFC) - Get Report (C) - Get Report Obama observed at the beginning of his speech that "some in financial industry are misreading this moment" and "do so at not only their own peril, but our nation's." He mixed tough talk with assertions that actors in the financial sector ought to have more patriotism and duty to the taxpayers that lent financial support.

(AIG) - Get Report (GS) - Get Report (MS) - Get Report (JPM) - Get Report (BAC) - Get Report (WFC) - Get Report (C) - Get Report He also took the opportunity to shirk the idea that any bank ought to be considered "too big to fail" again. Instead, they should not be allowed to take on "excessive" risk, something that the Federal Reserve would manage with expanded powers under his reform proposal.

"Here is what I want to emphasize today: Normalcy cannot lead to complacency," Obama warned. He later added, "I want everybody here to hear my words: We will not go back to reckless behavior and unchecked excess ... Wall Street can't go back to taking risks without consequences and expect that taxpayers will be there to break their fall."

(AIG) - Get Report (GS) - Get Report (MS) - Get Report (JPM) - Get Report (BAC) - Get Report (WFC) - Get Report (C) - Get Report Obama's team, using its leverage as a major preferred stock holder, has goaded banks into various moves since taking office in January. Boards and executives have changed, bonuses have been apologized for and occasionally returned, less risks have been taken, and capital levels remain high. But unless Congress acts to pass some version of his regulatory overhaul, none of those changes will be set in stone.

(AIG) - Get Report (GS) - Get Report (MS) - Get Report (JPM) - Get Report (BAC) - Get Report (WFC) - Get Report (C) - Get Report Yet it may be worth remembering that AIG ultimately answered to state insurance regulators despite operating in various markets around the world. Citigroup became Citigroup before Congress adjusted legislation to allow for such a financial behemoth. Fannie Mae (Stock Quote: FNM) and Freddie Mac were actually pushed by lawmakers to back some of the very loans that fueled their collapse.

(AIG) - Get Report (GS) - Get Report (MS) - Get Report (JPM) - Get Report (BAC) - Get Report (WFC) - Get Report (C) - Get Report Obama said his plan aims to "close the loopholes that were at the heart of this crisis" and noted that "regulators were charged with seeing the trees, but not the forest." Yet he spread blame for the global financial crisis across a wide path, noting that banks also pushed products destined to fail, and that taxpayers financing the bailout also entered lifestyles they couldn't afford and agreed to loan terms they didn't understand.

(AIG) - Get Report (GS) - Get Report (MS) - Get Report (JPM) - Get Report (BAC) - Get Report (WFC) - Get Report (C) - Get Report It was "a collective failure of responsibility in Washington, on Wall Street and across America that nearly led to the collapse of our financial system one year ago," Obama said.

But when it comes to repairing the damage, past crises have shown that the market eventually finds a way around rules that are passed. Congress adapts to a new financial reality, a few steps behind.

(AIG) - Get Report (GS) - Get Report (MS) - Get Report (JPM) - Get Report (BAC) - Get Report (WFC) - Get Report (C) - Get Report-- Staff writers Scott Eden and James Rogers contributed to this report.

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