Setting the stage for a major overhaul of financial regulation in the coming weeks, U.S. President Barack Obama on Saturday said Wall Street banks and other financial institutions had been “reckless” and “irresponsible” and they, along with their “special interest” representatives in Washington, were to blame for the crisis that has “ripped through our economy”. He added that his administration would hold them accountable and protect and empower consumers going forward.

Quoting investment guru Warren Buffet during his weekly address to the nation Mr. Obama put derivatives trading in the regulatory spotlight arguing that “derivatives bought and sold with little oversight [are] financial weapons of mass destruction”. He noted that the crisis was in part caused by firms such as AIG making “huge and risky bets — using things like derivatives — without accountability”.

In the context of the financial regulation legislation awaiting a Senate debate and vote over the coming weeks and months, Mr. Obama also sharply criticised the Republicans for siding with the special interests of Wall Street and waging “a relentless campaign to thwart even basic, common-sense rules — rules to prevent abuse and protect consumers”.

In a direct attack on the Republican leadership including Senate minority leader Mitch McConnell and Republican Senatorial Committee chairman John Cornyn, he said they had recently met two dozen top Wall Street executives to talk about how to block progress on this issue.

“Lo and behold, when he returned to Washington, the Senate Republican leader came out against the common-sense reforms we've proposed. In doing so, he made the cynical and deceptive assertion that reform would somehow enable future bailouts — when he knows that it would do just the opposite,” said Mr. Obama.

In addition to tighter controls over derivatives trading, he outlined a range of key areas of regulatory reform, including consumer financial protections, closing loopholes that allowed executives in institutions that were “too big to fail” to take risks that endangered the entire economy, and giving shareholders “new power” in the financial system, such as a vote on the salaries and bonuses awarded to top executives.

Underscoring his determination to get the legislation passed, Mr. Obama said: “This is certain: one way or another, we will move forward. This issue is too important. The costs of inaction are too great.”

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