President Barack Obama today said the stabilisation in the America's financial system is a success story of the last six months; but rued that there has not been a change in the behaviour of the US companies that has resulted in
"One of the success stories of the past six months is that we really have seen stabilisation in the financial system. It is not where it needs to be. But people are no longer talking about the financial system falling off a cliff. We've stepped away from the brink," Obama told reporters at a prime time White House press conference.
The president observed that's important because it means lot of companies right now can go into the marketplace and borrow money to fund inventory, fund payroll, and that will help the economy grow as a whole.
"Now that the financial system has bounced back, what you're seeing is that banks are starting to make profits again. Some of them have paid back the federal aid money that they received, the bank bailout money that they received. And we expect
more of them to pay this back. That's a good thing," Obama noted.
Observing that it's a good thing that banks are profitable again and have reserves in place and can lend, Obama said: "This is America, so if you're profitable in the free market system, then you benefit."
"But what we haven't seen, I think, is the kind of change in behaviour and practices on Wall Street that would ensure that we don't find ourselves in a fix again, where we've got to bail out these folks while they're taking huge risks and taking huge bonuses," he said.
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Obama argued that there is need to pass financial regulatory reform and pushing for it, he said "if we don't pass financial regulatory reform, then banks are going to go back to the same things that they were doing before."
"In some ways, it could be worse because now they know that the federal government may think that they're too big to fail. And so if they're unconstrained they could take even more risks," Obama observed.
"There are a number of elements of financial regulatory reform. With respect to compensation, I'd like to think that people would feel a little remorse and feel embarrassed and would not get million-dollar or multimillion-dollar bonuses.
"But if shame does not work, then I think one proposal that I put forward is to make sure that at least shareholders of these companies know what their executives are being compensated. And that may force some reductions,"