Obama's Wall Street Speech to Call for Swift Action on Financial Reform

Wall Street readied a collective Bronx Cheer for President Barack Obama's big speech in New York City Thursday, which is intended to boost his administration's proposals for financial regulatory reform. The White House has already said the president will use his address at Cooper Union to call for swift Senate action to forever change the way banks do business, from breaking up too-big-to-fail firms to casting a regulatory light on some of the darkest corners of the financial system.

Now that Obama has put health care reform firmly in his administration's win column, the financial services industry knows this time around the president means business. Nearly two years after the financial crisis hit, Obama is set to bear down on Wall Street, with the mission of holding it "accountable and protecting consumers," as press secretary Robert Gibbs put it in an email to the press.

Financial sector stocks have presumably discounted this eventuality. After all, the Senate's proposed Restoring Financial Stability Actwould change how the industry is regulated more dramatically than any time since the Great Depression.
What investors probably couldn't have seen coming, regardless of how inevitable it may seem in hindsight, were the fraud charges the Securities and Exchange Commission brought against Goldman Sachs (GS) late last week.

Days later, Goldman Sachs, Wall Street's most powerful, illustrious (and illustrative) investment bank, said it earned more than a billion dollars a month in the first three months of 2010. Perhaps making Obama's job that much easier, on Wednesday Goldman's chief rival Morgan Stanley (MS) likewise topped analysts' average estimate, booking a first-quarter profit of more than a billion dollars. (The whitest of white-shoe firms also ladled out $4 billion in employee compensation in the first quarter, the company said.)

And if timing is everything, what then to make of Wednesday's Senate panel vote to limit the ability of Wall Street firm's to trade derivatives -- those complicated, almost incomprehensible securities created by Wall Street's best and brightest that were behind the near collapse of the financial system?

As Eliot Spitzer, former New York State governor and attorney general said when the SEC sued Goldman Sachs last Friday, when it comes to Washington, there are no coincidences. Obama is set to make a stand today; Wall Street will be listening.