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Q I’ve got a very general question.

THE PRESIDENT: Okay, go ahead.

Q It’s a very general question, here. I work on Wall Street. I was wondering what kind of changes we can expect to see in the reform in the next couple years.

THE PRESIDENT: Well, here’s the essential components of Wall Street reform that we set up. Number one is that we got a — we had a system in which there was huge amounts of leverage（手段，影响力） that banks could take. And what leverage means is, if they got a dollar in deposits, they were making a $40 bet using that one dollar — which when times are good means you’re making a lot of money, right? You’re putting one dollar down of your own money, and you got $40, and when the market is going up, you’re making out like a bandit（取得巨大成功） . But when the market goes down, when it starts de-leveraging, you’re in trouble. And that’s basically what happened with Lehman’s and a lot of these other companies.

So one thing that we’ve said is that we’ve got to have — for big firms that are what we call “systemic,” that if they go down, the whole system could go down with them — we’ve got to have a better check and say, you know what, you’ve got to control a little bit how you work in terms of leverage. You’ve got to have enough capital, actual money, to cover the bets that you’re placing so that you’re not putting the whole system at risk. That’s number one.

Number two, there’s a whole derivatives market（衍生产品市场） out there, which, frankly, even the bankers don’t completely understand. But you’ve got trillions of dollars — and if you work on Wall Street you’re familiar obviously with the derivatives market. I mean, you’ve got trillions of dollars that are basically outside of the regulated banking system, and people didn’t know who’s making bets on what. And what we said was that derivatives market, it needs — it can continue, but it’s got to be in an open, transparent marketplace so that everybody knows who is betting on what.

And we’re very clear about who the various parties are in these complex derivatives transactions（处理，汇报） . That means the regulators can follow it a little more closely. That’s number two.

The third thing that we did is we made sure that we don’t have taxpayer bailouts again. So we’ve set up a system whereby if a big firm gets in trouble, we’re able to essentially quarantine（检疫，隔离） it, separate it out from the rest of the pack, liquidate（清算，偿付） it without it spilling over into the system as a whole. That’s the third thing.

And the fourth thing is having a consumer financial protection agency that is really going to do a good job making sure that consumers know what they’re getting when it comes to financial products. I mean, when you buy a toaster（烤箱） , there has been some assurance provided that that toaster will not explode in your face — right? There are a whole bunch of laws in there, people have to do tests on the toasters to make sure that nothing happens. But if you buy a mortgage that explodes in your face because you didn’t know what was going on, everybody acts like, well, that’s your problem.

Well, no, it’s actually all of our problem, because part of the reason we had this financial crisis was because people did not always understand the financial instruments that they were purchasing. A lot of these subprime（次级的） loans that were being given out, a lot of these no-interest — you can buy your house, you don’t put any money down, you don’t pay any interest, you got this beautiful house — and naturally people were thinking, well, this sounds great. But what they weren’t looking at was, okay, there’s a balloon payment five years down. This is only going to work if your housing — the value of your house keeps on appreciating. And if it stops appreciating, suddenly it’s not going to work anymore. People hadn’t thought through all those ramifications（分枝，分叉） . And that had an effect on the whole system.

So what we’ve said is we’re going to have a strong consumer finance protection agency whose only job is to look after you when it comes to financial products. And Joe and Rhonda and I were just talking about how it was only seven, eight years ago when Michelle and I were trying to figure out our student loans, how were we going to invest for the kids’ college education. We had — at the end of the month, I’d be getting my credit card bills, and I’m a pretty smart guy, but you open up some of those credit card bills — you don’t know what’s going on. You don’t read all that fine print. You just look at the statement.

Well, as an example of the kinds of things that this new agency are going to be enforcing, we’ve already passed a law — thanks again to Mary Jo and Sherrod — we’ve already passed a law that says a credit card company can’t raise the interest rates on existing balances. So it can’t attract you with a zero percent interest, you run up a $3,000 balance, and then suddenly they send you your next statement and it says, oh, your interest went up to 29 percent. You can’t do that. I mean, they’ll still be able to say, we’re going to raise your interest rate to 29 percent, but that can only be the balances going forward. It can’t be on the money that you borrowed where you thought it was a zero percent.

Well, that’s an example of straightforward（简单的，坦率的） , honest dealing that we’re going to be expecting. We think the financial markets will still make money, the banks can still make money, but they got to make money the old-fashioned way, which is loan money to small businesses who are providing services to the community. Loan money to Joe for his architectural firm, and he’s going to make sure you pay him back. Loan people for mortgages, but make sure that you’ve done the due diligence so that you’re not tricking them into something they can’t afford. Make sure that it’s something that you can afford — right?

They’re just a bunch of basic, common-sense reforms that we’re putting in place that will allow the market to function. Because the free market is the best system ever devised for creating wealth, but there have got to be some rules in the road so that you’re making money not by gaming the system, but by providing a better product or a better service. All right?

Well, listen, I want to thank all of you for spending the time. I know it got a little warm, and you guys just hung in there like troopers. I want to make sure that I thank, once again, Ted Strickland, Sherrod Brown, Mayor Michael Coleman, your lieutenant governor, and I believe the next United States senator, Lee Fisher, and Mary Jo Kilroy for being here. And obviously, I want to thank Joe and Rhonda Weithman and the whole Weithman family for sharing their backyard.

And we’re going to have to make sure that we’re helping their lawn here. It got trampled on a little bit. I hope you guys are not stepping in the corn. (Laughter.) Michelle, by the way, would be very proud to see that you’ve got the vegetable garden working. All right? Give them a big round of applause, everybody. (Applause.)

Thank you very much. Thank you. (Applause.)

Oh, and by the way, I just want you to know that the Weithmans made me the “O” in O-h-i-o. It’s on tape. It’s on tape somewhere. (Applause.)

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