The U.S. needs major changes to its financial system so consumers are better protected, banks fortified and the economy safeguarded from sliding into another Depression, President Obama said Saturday.
In his weekly radio and Internet address, Obama told Congress to act quickly and pass "commonsense rules that will our allow markets to function fairly and freely while reining in the worst practices of the financial industry."
That, he said, is the central lesson of the current financial crisis that has cost millions of Americans their jobs and nearly caused the collapse of the entire financial system.
"And we fail to heed that lesson at our peril," Obama said.
The Senate Banking, Housing and Urban Affairs Committee is set to begin debate Monday on legislation from its chairman, Sen. Christopher Dodd, D-Conn., that would give the government unprecedented powers to split up big financial firms, force the industry to pay for its most spectacular failures and create an independent consumer watchdog.
Obama made a strong pitch for that agency, a chief point of disagreement between Democrats and Republicans. The U.S. Chamber of Commerce has launched a $3 million campaign against that provision.
"I won't accept any attempts to undermine the independence of this agency," Obama said.
The House-passed version of the legislation creates a stand-alone agency with power to write and enforce regulations. Dodd's bill places an independent agency within the Federal Reserve and its regulations could be vetoed by an overarching government council headed by the treasury secretary and composed of financial regulators.
Already, Obama said, industry lobbyists are gearing up to spend millions of dollars in an attempt to defeat the legislation.
"In fact, the Republican leader in the House reportedly met with a top executive of one of America's largest banks and made thwarting reform a key part of his party's pitch for campaign contributions," Obama said, a reference to a meeting between House Republican Leader John Boehner of Ohio and JPMorgan Chase & Co. chief executive Jamie Dimon.
The president said he remains a "vigorous defender" of free markets.
"But what we have seen over the past two years is that without reasonable and clear rules to check abuse and protect families, markets don't function freely," he said.
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