Earlier today, President Obama addressed Wall Street leaders on financial rescue and reform in the wake of the recent financial crisis. Obama blamed the crisis on “a collective failure of responsibility in Washington, on Wall Street, and across America.” The speech largely echoed the President’s proposed regulatory overhaul as outlined by the Administration in June.

President Obama called for reforms in three major areas. Firstly, Obama called for “new rules to protect consumers and a new Consumer Financial Protection Agency” to enforce the rules. The CFPA would “have the power to make certain that consumers get information that is clear and concise, and to prevent the worst kinds of abuses.” Obama argued that the new rules would increase competition in the financial industry, and “provide people better and greater choices” while discouraging financial products that are “most complex or the most confusing.”

Secondly, the President called for closure of “the loopholes that were at the heart of the crisis.” He criticized existing regulation, noting that “some companies can actually shop for the regulator of their choice” and that “hedge funds can operate outside of the regulatory system altogether.” Obama stated that such loopholes should be addressed by an oversight council that would “bring together regulators from across markets,” identify regulatory gaps, and address complex issues. Additionally, the President called for “resolution authority” to combat the “idea that some firms are too big to fail.” “For a market to function, those who invest and lend in that market must believe that their money is actually at risk,” said Obama. He also called for financial firms to “meet stronger capital and liquidity requirements and observe greater constraints on their risky behavior.”

Thirdly, Obama addressed the need for international cooperation while reforming the financial system. Noting the cooperation between global leaders at April’s G20 Summit in London, he promised to continue working toward coordinated reform at next week’s G20 Summit in Pittsburgh, Pennsylvania. Obama highlighted the “need to fight against protectionism,” but also argued that “no trading system will work if we fail to enforce our trade agreements.”