WASHINGTON -- President Barack Obama, who once called bank executives "fat cats" and their pay "obscene," says Wall Street needs to change executive pay incentives that reward risky bets that can yield fortunes but can also devastate financial institutions.
In an interview with Rolling Stone magazine, Obama says that despite congressional passage of a financial regulation overhaul in 2010, there still are not enough adequate means of holding risk takers in the industry accountable if their investment schemes fail.
"You still have a situation where people making bets can get a huge upside, and their downsides are limited," Obama says in the edition that hits newsstands on Friday. "So it tilts the whole system in favor of very risky behavior."
The wide ranging interview with presidential historian Douglas Brinkley covered topics ranging from Republican presidential challenger Mitt Romney's secretly recorded remarks to donors about Obama supporters to Supreme Court Chief Justice John Roberts' tie-breaking decision declaring Obama's health care plan constitutional.
Obama's appearance on the magazine's cover comes less than two weeks before the Nov. 6 election and underscores the president's outreach to young voters in key battleground states. Obama also has agreed to an interview with MTV that is to air Friday.
When Congress wrote new financial regulations two years ago, it included "say on pay" provisions giving shareholders the right to vote on executive pay packages. But Obama said there was still a need to limit compensation, though he said it could be accomplished with a mix of legislation and corporate governance.
"I think a legitimate concern, even after Dodd-Frank, is, `Have we completely changed those incentives?'" Obama said, referring to the legislation by the names of its two chief Democratic sponsors, then-Sen. Christopher Dodd of Connecticut and Rep. Barney Frank of Massachusetts.
"These days, you've got guys who are making five years of risky bets, but it's making them $100 million every year," Obama told Brinkley. "By the time the chicken comes home to roost, they're still way ahead of the game."
In the interview, Obama also said he was not surprised by Roberts' decision upholding the constitutionality of the health care law. Roberts upheld the individual insurance requirement at the heart of the law as a tax, but rejected Obama administration arguments that the mandate was justified by the Constitution's clause giving Congress power over interstate commerce. That clause has been used to justify congressional authority for most federal programs since the New Deal.
Obama, a former constitutional law professor, shared the view of some legal scholars who say Roberts rejected the Commerce Clause argument to give himself flexibility to restrict congressional power in the future.
"It was interesting to see them, or Justice Roberts in particular, take the approach that this was constitutional under the taxing power," Obama said. "The truth is that if you look at the precedents dating back to the 1930s, this was clearly constitutional under the Commerce Clause. I think Justice Roberts made a decision that allowed him to preserve the law but allowed him to keep in reserve the desire, maybe, to scale back Congress' power under the Commerce Clause in future cases."
Obama said he was surprised, however, when Romney, in remarks meant to be private, told donors in May that the 47 percent of the public who backed Obama believed they were victims and were entitled to government assistance. Obama has used that remark to portray Romney as out of touch.
"That sense that folks who have contributed to this country but are at the lower ends of the income scale are somehow looking for government to do something for them, or feel some sense of entitlement, is just fundamentally wrong," he said.
With Halloween approaching, Brinkley, in a lighter moment, asked what he would like Romney to wear as a costume.
"I don't know about this Halloween," Obama replied. "Next Halloween I hope he'll be an ex-presidential candidate."
Also on HuffPost:
Prosecution For Financial Fraud Hit A 20-Year Low During The Obama Administration
Despite Obama's <a href="http://www.thedailybeast.com/newsweek/2012/05/06/why-can-t-obama-bring-wall-street-to-justice.html" target="_hplink">promises to crack down</a> on Wall Street, federal prosecutions of financial fraud hit a 20-year low last year, according to a <a href="http://www.huffingtonpost.com/2011/11/15/financial-fraud-prosecution_n_1095933.html" target="_hplink">November study from a watchdog group</a>.
The number of these types of prosecutions has been falling every year since 1999 -- in other words, there were more prosecutions during every year of George W. Bush's presidency than during every year of Obama's.
Income Inequality Is Worse Under Obama Than Under Bush
The rich took home a <a href="http://www.huffingtonpost.com/2012/04/11/income-inequality-obama-bush_n_1419008.html" target="_hplink">greater share of America's income pie</a> from 2009 to 2010 than they did between 2002 and 2007, according to an April analysis from Emmanuel Saez, a professor at the University of California, Berkeley. That means the gap between the rich and the poor was more pronounced under Obama's presidency than under George W. Bush's.
Obama Wants To Lower The Corporate Tax Rate
Some of America's most profitable companies used a variety of loopholes to pay <a href="http://www.huffingtonpost.com/2011/11/03/major-corporations-tax-subsidies_n_1073548.html" target="_hplink">less than zero in taxes</a> between 2008 and 2010, according to a November 2011 report by the Citizens for Tax Justice. But the Obama administration wants to make it even easier for corporations to have a smaller tax bill; Obama proposed a tax overhaul that would <a href="http://www.huffingtonpost.com/2012/02/22/barack-obama-proposing-to_n_1292939.html" target="_hplink">cut the corporate tax rate</a> from 35 percent to 28 percent.
Health Care Reform Won't Make Health Care Cheaper For Most Americans
Once the health care law takes effect, insurance companies will be footing the bill for millions of previously uninsured Americans and for those who were denied coverage for pre-existing conditions. And health insurance companies will <a href="http://www.huffingtonpost.com/2012/04/20/health-care-costs-rise_n_1440584.html" target="_hplink">likely pass on to consumers the cost</a> of insuring the new patients.
After Massachusetts enacted a similar health care plan in 2006, premiums for an individual plan in the state <a href="http://www.huffingtonpost.com/2012/06/28/health-insurance-ruling-supreme-court-costs_n_1634555.html" target="_hplink">rose 18 percent</a> over three years.
Obama's Housing Programs Have Largely Been A Failure
In 2009, Obama announced the Home Affordable Mortgage Program, promising to help 3 to 4 million borrowers, but as of January -- more than three years into the program -- HAMP had <a href="http://www.huffingtonpost.com/2012/01/27/hamp-loan-modification-expands_n_1237169.html" target="_hplink">only reached 1 million borrowers</a>. In an aim to give the program legs, administration <a href="http://www.huffingtonpost.com/2012/01/27/hamp-loan-modification-expands_n_1237169.html" target="_hplink">officials changed the rules</a> in January to make more borrowers eligible. Still, the fixes were likely too little too late, experts said at the time.
Homeowners Haven't Seen Much Out Of That Huge Mortgage Deal
The Obama Administration touted the $25 billion mortgage deal it reached with 49 states and the big banks to settle allegations that banks mishandled mortgages. As part of the settlement, banks said they would <a href="http://www.huffingtonpost.com/2012/06/12/national-mortgage-settlement-_n_1589499.html" target="_hplink">offer at least $10 billion</a> in loan forgiveness to homeowners. But months after the deal was inked, <a href="http://www.huffingtonpost.com/2012/08/29/debt-relief-mortgage-settlement_n_1839923.html" target="_hplink">banks have been slow</a> to hand out the money.
Democrats Have Received Lots Of Campaign Cash From Bain Employees
The Democratic National Convention will feature <a href="http://www.huffingtonpost.com/2012/09/03/bain-capital_n_1852302.html" target="_hplink">employees of firms run by Bain Capital</a> -- the private equity firm where Mitt Romney was formerly CEO -- likely in an aim to raise questions about Romney's tenure at the now-controversial company. But Democratic candidates and committees had <a href="http://articles.boston.com/2012-05-23/nation/31814221_1_obama-campaign-mitt-romney-romney-claims" target="_hplink">actually netted double the amount of campaign cash from Bain workers</a> as of May than their Republican counterparts since 2008, according to the <em>Boston Globe</em>.
Now, Republicans are beating their Democratic colleagues in Bain cash, with <a href="http://www.opensecrets.org/overview/topcontribs.php" target="_hplink">58 percent of donations from Bain</a> employees going to Republican candidates and parties, according to the Center for Responsive Politics.
<strong>CORRECTION:</strong><em> An earlier version of this slide misstated that Democrats were receiving more donations from Bain employees than Republicans. That was the case in May. As of September Republicans are receiving more donations from Bain employees.</em>
Goldman And Other Wall St. Firms Have Largely Escaped Punishment For Their Role In The Financial Crisis
The announcement last month that the Justice Department wouldn't be prosecuting Goldman Sachs over allegations surrounding the financial crisis was <a href="http://www.huffingtonpost.com/2012/08/15/matt-taibbi-eric-holder_n_1784167.html" target="_hplink">a reminder for many</a> that the Obama Administration has largely let banks off the hook for their role in the meltdown. And regulators and officials may be running out of time; <a href="http://dealbook.nytimes.com/2012/08/09/goldman-says-sec-has-ended-mortgage-investigation/?ref=business" target="_hplink">the statute of limitations</a> for crimes related to the financial crisis is fast approaching, according to <em>The New York Times</em>.
The Revolving Door Is Alive And Well In Obama Administration
Many current and former members of the Obama Administration have ties to Wall Street. The <a href="http://www.huffingtonpost.com/2012/08/30/wall-street-washington_n_1842517.html" target="_hplink">list includes</a> the president's current and former chiefs of staff -- Jacob Lew and Bill Daley, respectively -- as well as his former budget director, Peter Orszag, and others.
Too Big To Fail Banks Have Grown Under Obama
At the end of 2011, five big banks, including Bank of America and JPMorgan Chase, held <a href="http://www.bloomberg.com/news/2012-04-16/obama-bid-to-end-too-big-to-fail-undercut-as-banks-grow.html" target="_hplink">56 percent of the U.S. economy</a>, according to Bloomberg, compared to 43 percent five years earlier. That's right, the too-big-to-fail banks have actually gotten bigger.
The U.S. Has Gained A Lot Of Low-Wage Jobs During The Recovery
Welcome to the U.S. of Low-Wage America. Most of the jobs lost during the recession paid middle wages, while most of those <a href="http://www.huffingtonpost.com/2012/08/31/low-wage-jobs_n_1846733.html" target="_hplink">gained during the recovery were low-wage jobs</a>, according to a recent study from the National Employment Law Project.
Incomes Declined More During The Recovery Than The Recession
Median <a href="http://www.nytimes.com/2011/10/10/us/recession-officially-over-us-incomes-kept-falling.html" target="_hplink">household income fell 6.7 percent</a> between June 2009, when the recession technically ended, and June 2011, according to a Census Bureau study cited by <em>The New York Times</em>. That's more than the 3.2 percent incomes fell during the recession, between 2007 and 2009.
Payroll Tax Cut May Expire On Obama's Watch
Last December, congressional Democrats managed to save the payroll tax cut for one more year, giving 122 million workers a few extra bucks each paycheck, but now that <a href="http://online.wsj.com/article/SB10000872396390444130304577561410867407728.html" target="_hplink">boost may quietly disappear</a>, according to the <em>Wall Street Journal</em>. That's because the White House won't be pushing for another payroll tax cut extension this year.
Many Top Obama Donors Are Employees Of Major Corporations
Of the top 10 companies with employees donating money to Obama's campaign, three are big banks: JPMorgan Chase, Citigroup and Goldman Sachs, according to <a href="http://www.opensecrets.org/pres08/contrib.php?cid=N00009638" target="_hplink">the Center for Responsive Politics</a>. Some of Obama's other major contributors include employees from big companies such as Microsoft and Google.
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