President Barack Obama's speech across the street from the New York Stock Exchange this afternoon sent a blazing -- but unintended -- message: fixing what ails Wall Street is not that important.

While Obama wants to withdraw Washington's support for Wall Street and urges Congress to pass his package of financial reforms, he's doing it almost as an after-thought to what is far more important to him -- reforming health care.

Today's speech was a day short of a year since Lehman Brothers' $693 billion bankruptcy. And if it were not for that near-anniversary, it would have been far better for Obama to have given that speech after his health care push had yielded a signed bill. To be fair, his defense of the actions that pulled the financial world back from the brink was both effective and timely.

Nevertheless, I am concerned that Monday's call for a financial consumer protection agency, a systemic regulator of finance, and a derivatives exchange will quickly fade in the public's memory. And with 70 percent of the public lacking confidence in the U.S.'s ability to stop another financial industry meltdown, such fading could be politically costly.

As I posted Sunday, Obama's plan unfortunately misses the mark compared to FDR. While I like the idea of protecting consumers from Wall Street's mendacity and creating a derivatives exchange, there are flaws in both ideas. The first, fails to change Wall Street's financial incentives so the costs of misleading the public are much higher than the benefits to banker's financial well-being.

And the second -- the derivatives exchange proposal -- has a huge loophole in it which dooms it to failure. It proposes to create a public exchange for standard derivatives and lets Wall Street maintain its private exchange for customized ones. It also exempts hedge funds from participating in the public exchange. This will create the illusion of solving the problem while letting things stay the way they were when they brought, say, American International Group (AIG) to its knees.

The biggest problem with Obama's proposal is that it creates a systemic regulator for financial institutions deemed too-big-to-fail (TBTF). This is a problem because by having a systemic regulator for such TBTF institutions, it allows them to persist. And the TBTF firms are getting bigger according to Nobel Prize winner, Joseph Stiglitz.

Rather than merely requiring them to hold more capital -- a goal which will be hard to enforce -- Obama should break them up so that they're so small that their failure cannot endanger the entire financial system. Instead, his plan rewards them for failing big.

This sends the wrong message over the long-term to Wall Street -- we will let you make record profits and bonuses while the bubble expands and then when you fail -- and put the entire financial system at risk -- we'll use taxpayer money to save you and pay bonuses to your top executives.

While I thought the beginning of Obama's speech was good, I am afraid that a year from now we will find ourselves far short of the financial fix we need.

So if Monday's speech leads Congress to pass the financial reform legislation Obama proposes, in homage to Sam Walton, I will fly down to Wall Street and dance the hula in a grass skirt.

Peter Cohan is a management consultant, Babson professor and author of eight books including, You Can't Order Change. Follow him on Twitter. He owns AIG stock and has no financial interest in the other securities mentioned.


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