Obama faced a tough audience yesterday in New York, one that didn’t’ cheer, clap nor smiled, but was grimacing, nervous and stern.
The happy few invited included chairman of Citigroup Richard Parsons; Goldman Sachs president Gary Cohn; Evercore Partners CEO Roger Altman; hedge fund Third Point founder Daniel Loeb, and fellow hedge funder James Chanos.
New York Times’ Andrew Ross Sorkin reports that although the attendees were polite, it seems as if they came to listen more out of curiosity than to reflect on the past year and on ways to change and improve the financial system.
They came, they listened, they left. There was little sense that the country was any closer to reforming Wall Street. After the speech, they all departed for their real power lunches.
In a sad way, the speech gives the impression of a parent scolding his children for bad behaviour – children that will listen and won’t say anything to not make any waves, but who have better things to do and will resume them as soon as the sermon is over. In the end, all the president did was slap them on the wrist.
If the Wall Streeters were underwhelmed, maybe it’s because the speech as Charlie Gasparino argues, lacked substance
If the president really wanted to scare Wall Street to change its evil ways, he would have made one simple declarative statement: There will be no more bailouts. The concept of too big to fail is over, and what’s left of Wall Street will be obliterated if it once again engages in the behaviour that boiled over this time last year.
What he did say, loud and clear in my opinion, is that Wall Street’s free lunch is bigger and better than ever, particularly when he remarked, “that instead of learning the lessons of Lehman and the crisis from which we are still recovering,” some on Wall Street “are choosing to ignore them.” He then went on to discuss how the government will regulate the miscreants with “strong rules of the road.”
Scary stuff? I’m sure the traders at Goldman who just cranked $3 billion in profits trading bonds as if the financial crisis never happened are quaking in their shoes.