Obama's Promises on Banking

President Obama's intentions and promises with regards to the financial sector, from his speech to the Business Roundtable this week:

These are all important steps. But the only way we can truly unlock credit and heal our financial system for good is to address the state of our banking system. And I know that this crisis is at the top of your list of immediate concerns — and I promise you, it is at the top of mine, as well.

We all know how we got here. A wave of complex and risky transactions around mortgages and other loans produced huge profits for financial institutions and those who run them — until the housing bubble burst. And now some of the nation’s largest banks are holding so-called “toxic assets” — problematic debt that are dragging down the balance sheets of these institutions with no real market in which to sell them. And this has caused a slowdown in lending. And since finance today is global, the virus has spread worldwide.

Now, it’s important to note that there are thousands of banks, large and small, that have made sound decisions and are on solid footing. And all Americans need to know that their deposits are secure.

But the weakened condition of some of our largest banks has implications for the entire system, and those weaknesses must be addressed.

And critical to that solution is an honest and forthright assessment of the true status of bank balance sheets — something that we’ve not yet had. And that’s why the Treasury has asked bank regulators to conduct intensive examinations or “stress tests” of each bank.

When that process is complete next month, we will act decisively to ensure that our major banks have enough money on hand to lend to people even in more difficult times. And if we learn that such a bank has more serious problems, we will hold accountable those responsible, force the necessary adjustments, provide the support to clean up their balance sheets, and assure the continuity of a strong, viable institution that can serve our people and our economy.

I intend to hold these banks fully accountable for any assistance they’ll receive, and this time they’ll have to clearly demonstrate how taxpayer dollars result in more lending for the American taxpayer.

I also intend to enact tough, common-sense regulatory reforms, equal to the challenges of a 21st century financial system, so that a crisis like this never happens again. And when I meet with the leaders of the other G20 nations next month, I’ll ask them to join us in these actions, because in an age when financial transactions often cross borders, global coordination is essential to safeguard against future crises.

And then he went on to say this:

You see, we cannot go back to endless cycles of bubble and bust. We can’t continue to base our economy on reckless speculation and spending beyond our means; on bad credit and inflated home prices and over-leveraged banks. This crisis teaches us that such activity is not the creation of lasting wealth — it’s the illusion of prosperity, and it hurts us all in the end.

Instead, we must build this recovery on a foundation that lasts — on a 21st century infrastructure and a green economy with lower health care costs that create millions of new jobs and new industries; on schools that prepare our children to compete and thrive; on businesses that are free to invest in the next big idea or breakthrough discovery.

We cannot wait to build this foundation. Putting off these investments for another four years or eight years or 12 years or 20 years would be to continue the same irresponsibility that led us to this point. It would be exactly what Washington has done for decades. And it will make our recovery more fragile and our future less secure.

And that’s a future I don’t accept — not for my children, and not for yours. I did not come here to pass our problems on to the next President or the next generation — I’m here to solve them. I’m here to start building an economy and a prosperity that lasts.

I'm trusting that he means every word of this, and I'm going to give him the benefit of the doubt. And I'm also going to be holding him accountable for his intentions and promises.