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Analysis: Obama's stronger role on Wall Street reform

By Tom Cohen, CNN
President Obama has taken a more active role in shaping Wall Street reform.
President Obama has taken a more active role in shaping Wall Street reform.
  • President Obama is taking a more visible leadership role in Wall Street reform
  • Obama is controlling message to avoid a repeat of backlash against health care reform
  • Result could be second major legislative victory, this time with some Republican support

Washington (CNN) -- President Obama appears to have learned one lesson from the bruising fight over health care reform.

Some Democrats criticized Obama for failing to assume a leading role in shaping the health care legislation, which they said extended the congressional wrangling needed to get the bill passed.

Now pushing the second major reform initiative of his presidency -- this time to strengthen regulations on the financial industry -- Obama is taking a more visible leadership role. In recent days, the president has pushed hard for the measure by backing specific provisions and criticizing the Senate's top Republican for what Obama called spreading misinformation.

On Thursday, Obama heads to New York for a speech at historic Cooper Union to call for quick congressional approval of financial regulation reforms to prevent another Wall Street meltdown like the one in 2008 that helped cause the widespread recession.

Obama's public role on financial regulation reform is "very different from health care reform," noted CNN senior political analyst Gloria Borger.

"On health care reform, it took the president quite some time to start getting involved," Borger said. For financial reform, Obama is going to Wall Street, the White House has hinted at a compromise on a $50 billion liquidation fund opposed by Republicans and Treasury Secretary Tim Geithner has been involved in negotiations, she said.

"This is a White House that wants to get this done, and the president will be out there personally doing it," Borger said.

In general, the issue of tightening regulations on risky Wall Street practices that led to a recession is more popular politically than the comprehensive health care reform effort, which endured months of tortuous legislative maneuvering before finally passing.

Obama's hands-on role in shaping the financial reform legislation, including threats to veto a watered-down proposal, has helped Democratic colleagues hammering out the details with Republicans.

In addition, Obama's more aggressive approach seeks to better control the messaging around the issue to avoid a repeat of the public backlash against the health care reform bill that was fueled in part by Republicans and the insurance industry.

Last year, Obama and the Democrats were slow to respond to misleading claims about the health care proposal -- that it would force senior citizens off Medicare, provide coverage for illegal immigrants and create "death panels."

When Democratic members of Congress went home for their August break, they faced angry constituents further riled by the misinformation. It took months to overcome some of the false perceptions of the bill.

This time, Obama has counter-punched quickly.

When Senate Minority Leader Mitch McConnell, R-Kentucky, said last week that a proposed financial regulations reform bill passed by Democrats on the Senate Banking Committee would institutionalize federal bailouts of big banks, Obama singled him out in his weekly radio and Internet address.

Saying the reforms are opposed by those "who profit from the status quo" and their "allies in Washington," Obama told how "just the other day, in fact, the leader of the Senate Republicans and the chair of the Republican Senate campaign committee met with two dozen top Wall Street executives to talk about how to block progress on this issue."

"Lo and behold, when he returned to Washington, the Senate Republican leader came out against the common-sense reforms we've proposed," Obama said. "In doing so, he made the cynical and deceptive assertion that reform would somehow enable future bailouts when he knows that it would do just the opposite."

Such a direct attack, particularly in the traditional Saturday message to the nation, was unusual for Obama and firmly established him as a leading public player on the issue.

In response, McConnell was careful to say the bill would ensure continued government intervention in future financial crises, but not necessarily taxpayer-funded bailouts.

"We want to make sure that we don't set up a system whereby we empower the government to continue to do what it's been doing -- running banks, car companies," McConnell said Sunday on CNN's "State of the Union" program. "The American people are saying 'we don't want another bailout,' but they also don't want a kind of perpetual, government massive interventions across the board running private businesses."

Two days later, McConnell spoke of a new bipartisan effort that could bring a compromise on the bill. Then on Wednesday, the Senate Agricultural Committee approved its version of financial reform legislation with support from one Republican -- the first GOP vote so far in favor of either Senate proposal.

Eventual bipartisan congressional approval of a financial reform bill would reflect both the general popularity of the issue, especially in an election year, and Obama's increased savvy in his second year in office. By contrast, Republicans fought the health care bill to the finish, with the measure receiving no GOP votes when finally approved by Congress.

At the same time, some striking similarities exist between the legislative battles waged over Obama's two biggest reform initiatives so far.

Like the health care bill, the financial reform bill was first passed by the House before getting hung up in the Senate's more deliberative processes.

Like the health care bill, Senate Democrats negotiated for weeks with Republicans before declaring an impasse and pledging to move forward on their own.

And in a repeat of tactics from the health care debate, fiercely partisan rhetoric abounded.

In the end, though, the result could be a second major legislative victory for the president and Democrats, this time with some Republican support.