Here’s the prepared text of President Barack Obama’s speech at New York’s Federal Hall, directed to leaders of the financial community:

Thank you all for being here and for your warm welcome. It’s a privilege to be in historic Federal Hall. It was here more than two centuries ago that our first Congress served and our first President was inaugurated. It was here, in the early days of our Republic, that Hamilton and Jefferson debated how best to administer a young economy and to ensure that our nation rewarded the talents and drive of its people. Two centuries later, we still grapple with these questions – questions made more acute in moments of crisis.

It was one year ago that we experienced just such a crisis. As investors and pension-holders watched with dread and dismay, and after a series of emergency meetings often conducted in the dead of the night, several of the world’s largest and oldest financial institutions had fallen, either bankrupt, bought, or bailed out: Lehman Brothers, Merrill Lynch, AIG, Washington Mutual, Wachovia. A week before this began, Fannie Mae and Freddie Mac had been taken over by the government. Other large firms teetered on the brink of insolvency. Credit markets froze as banks refused to lend not only to families and businesses but to one another. Five trillion dollars of Americans’ household wealth evaporated in the span of just three months.

Congress and the previous administration took difficult but necessary action in the days and months that followed. Nevertheless, when this administration walked through the door in January, the situation remained urgent. The markets had fallen sharply; credit was not flowing. It was feared that the largest banks – those that remained standing – had too little capital and far too much exposure to risky loans. And the consequences had spread far beyond the streets of lower Manhattan. This was no longer just a financial crisis; it had become a full-blown economic crisis, with home prices sinking, businesses struggling to access affordable credit, and the economy shedding an average of 700,000 jobs each month.

We could not separate what was happening in the corridors of our financial institutions from what was happening on factory floors and around kitchen tables. Home foreclosures linked those who took out home loans and those who repackaged those loans as securities. A lack of access to affordable credit threatened the health of large firms and small businesses, as well as all those whose jobs depended on them. And a weakened financial system weakened the broader economy, which in turn further weakened the financial system.

Just a few months ago, many experts from across the ideological spectrum feared that ensuring financial stability would require even more tax dollars. Instead, we’ve been able to eliminate a $250 billion reserve included in our budget because that fear has not been realized.

The only way to address successfully any of these challenges was to address them together, and so this administration – with terrific leadership by my Treasury Secretary, Tim Geithner, as well the Chair of my Council of Economic Advisers, Christy Romer, and the Chair of the National Economic Council, Larry Summers  – moved quickly on all fronts, initializing a financial stability plan to rescue the system from the crisis and restart lending for all those affected by the crisis. By opening and examining the books of large financial firms, we helped restore the availability of two things that had been in short supply: capital and confidence. By taking aggressive and innovative steps in credit markets, we spurred lending not just to banks, but to folks looking to buy homes or cars, take out student loans, or finance small businesses. Our home ownership plan has helped responsible homeowners refinance to stem the tide of lost homes and lost home values.

And the recovery plan is providing help to the unemployed and tax relief for working families, all while spurring consumer spending. It’s prevented layoffs of tens of thousands of teachers, police officers, and other essential public servants. And thousands of recovery projects are underway all across America, putting people to work building wind turbines and solar panels, renovating schools and hospitals, and repairing our nation’s roads and bridges.

Eight months later, the work of recovery continues. And although I will never be satisfied while people are out of work and our financial system is weakened, we can be confident that the storms of the past two years are beginning to break.

In fact, while there continues to be a need for government involvement to stabilize the financial system, that necessity is waning.  After months in which public dollars were flowing into our financial system, we are finally beginning to see money flowing back to the taxpayers. This doesn’t mean taxpayers will escape the worst financial crisis in decades unscathed. But banks have repaid more than $70 billion, and in those cases where the government’s stake has been sold completely, taxpayers have actually earned a 17-percent return on their investment. Just a few months ago, many experts from across the ideological spectrum feared that ensuring financial stability would require even more tax dollars. Instead, we’ve been able to eliminate a $250 billion reserve included in our budget because that fear has not been realized.

While full recovery of the financial system will take a great deal more time and work, the growing stability resulting from these interventions means we are beginning to return to normalcy.  But what I want to emphasize is this: normalcy cannot lead to complacency.

Unfortunately, there are some in the financial industry who are misreading this moment.  Instead of learning the lessons of Lehman and the crisis from which we are still recovering, they are choosing to ignore them.  They do so not just at their own peril, but at our nation’s.  So I want them to hear my words: We will not go back to the days of reckless behavior and unchecked excess at the heart of this crisis, where too many were motivated only by the appetite for quick kills and bloated bonuses.  Those on Wall Street cannot resume taking risks without regard for consequences, and expect that next time, American taxpayers will be there to break their fall.

That’s why we need strong rules of the road to guard against the kind of systemic risks we have seen.  And we have a responsibility to write and enforce these rules to protect consumers of financial products, taxpayers, and our economy as a whole.  Yes, they must be developed in a way that does not stifle innovation and enterprise.  And we want to work with the financial industry to achieve that end. But the old ways that led to this crisis cannot stand.  And to the extent that some have so readily returned to them underscores the need for change and change now.  History cannot be allowed to repeat itself.

Instead, we are calling on the financial industry to join us in a constructive effort to update the rules and regulatory structure to meet the challenges of this new century. That is what my administration seeks to do. We have sought ideas and input from industry leaders, policy experts, academics, consumer advocates, and the broader public. And we’ve worked closely with leaders in the Senate and House, including Senators Chris Dodd and Richard Shelby, and Congressman Barney Frank, who are now working to pass regulatory reform through Congress.

We’ve got to close the loopholes that were at the heart of the crisis. Where there were gaps in the rules, regulators lacked the authority to take action. Where there were overlaps, regulators often lacked accountability for inaction.  These weaknesses in oversight engendered systematic, and systemic, abuse.

Taken together, we are proposing the most ambitious overhaul of the financial system since the Great Depression. But I want to emphasize that these reforms are rooted in a simple principle:  we ought to set clear rules of the road that promote transparency and accountability. That’s how we’ll make certain that markets foster responsibility, not recklessness, and reward those who compete honestly and vigorously within the system, instead of those who try to game the system.

“You don’t get a sense that there’s been a change of culture and behavior as a consequence of what has happened. And that’s why the financial regulatory reform proposals that we put forward are so important,” Obama said in a PBS interview in July.

On Capitol Hill, the so-called Shareholder Bill of Rights introduced by Senators Charles Schumer (D-NY) and Maria Cantwell (D-WA) incorporates proposals already proposed by the SEC, and then some. Its far-reaching provisions include say on pay, majority voting, and proxy access; annual director elections; splitting the role of the chairman and CEO; and the creation of a separate risk committee.

Against this backdrop, it is widely accepted that an annual nonbinding advisory vote by shareholders on executive pay at all publicly traded companies will become the law of the land. The measure was approved by the House in August and is expected to be taken up in the Senate.

In addition, the SEC has issued two sets of proposals—now subject to public comment until September 15—that would require greater disclosure on several fronts and “enhance” proxy disclosure and solicitation. Specifically, the SEC proposals include:

• Broader-based pay disclosures to provide more information about compensation policies beyond the named officers in the Compensation Disclosure & Analysis (CD&A).
• Disclosure on director qualifications including the experience, attributes, or skills that qualify them to serve on the board or specific committees of the board.
• Greater explanation of the company’s leadership structure, including why it is best-suited to the company and why the CEO and chairman’s roles are combined or split.
• More disclosure on the board’s role in risk management.-Disclosure of fees paid to comp consultants and services other than compensation consulting for officers and directors.

If adopted, these rule changes would become effective for proxy filings for a fiscal year ending after December 15.

The SEC also voted to approve an NYSE proposal to eliminate broker discretionary voting for all elections of directors, whether contested or not. This rule change would apply to shareholder meetings held next year.

On Capitol Hill, the so-called Shareholder Bill of Rights introduced by Senators Charles Schumer (D-NY) and Maria Cantwell (D-WA) incorporates proposals already proposed by the SEC, and then some. Its far-reaching provisions include say on pay, majority voting, and proxy access; annual director elections; splitting the role of the chairman and CEO; and the creation of a separate risk committee.

The Business Roundtable called the bill an “unnecessary intrusion into matters governed by state corporation law, the SEC, stock exchanges, and public company boards.”

“All of these measures are well intended, but they are misguided,” says Marc Rosenberg, a partner at law firm Cravath. He says they give more authority to shareholders, who don’t have a legal obligation to look out for the best interest of the company.

Others, including Thomas Quaadman of the U.S. Chamber of Commerce’s Center for Capital Market Competitiveness, argue that federal legislation is not about improving the corporate governance of poorly run companies, but rather “liberalizes rules so that activist investors can avoid costly proxy fights and elect their own directors instead.”

Bankruptcy for CIT Group Inc. is more likely after denial for additional relief from the Federal Reserve, Treasury, and FDIC. Linda Shen at Bloomberg reported that regulators were not convinced that the bank posed any systemic risk and resisted adding more taxpayer risk in addition to $2.33 billion already given to the bank. CIT needs $2 billion in rescue funds from its debt owners and has given them 24 hours to put up the money. Lacking sufficient cash, CIT will probably file for bankruptcy.

Treasury Secretary, Timothy Geithner, did comment directly on the CIT situation, but said “greater confidence in stability” is returning to the financial system. Other government officials cited the lack of a viable business plan for rejecting additional funds.

A stress test by the Federal Reserve concluded CIT would need as much as $4 billion in funding to withstand the worst economic conditions. The FDIC worried additional funds would put taxpayer money at risk due to the company’s declining credit quality. The agency’s main purpose is to protect depositors and not bank holding companies and their investors.

If CIT files for bankruptcy it maybe the first for a company that received TARP funds to keep lenders afloat. Credit default swaps for CIT were at 47% today, in addition to 5% a year. A CDS for CIT would require $500,000 a year, and $4.7 million up front, to insure $10 million of CIT debt.

Bernard L. Madoff’s accountant, David G. Friehling, agreed to waive an indictment, a move that result in him pleading guilty in an investigation into the multibillion-dollar fraud, reports The New York Times.

Prosecutors in New York filed a notice of intent to charge Friehling—meaning Friehling agreed with prosecutors and evidence against him will not be presented to a grand jury.

Friehling was arrested for securities fraud in March. He is accused of lying to investors by certifying that he had audited the financial statement’s of Madoff’s firm. Friehling has not entered a formal response to the government’s allegations.

The memorandum, imposed in May, contains a series of deadlines that BofA must adhere to. These deadlines include the reseating of a majority of its directors; BofA has so far replaced four of its 16 directors.

Much of the memorandum’s focus is on stabilizing BofA after its acquisition of Merrill Lynch earlier this year. “Management has taken on significant risk, perhaps more than anticipated at the time the acquisition was proposed,” said one official. “More than normal supervisory attention will be required for the foreseeable future.”

Other banks that have received similar memoranda include Citigroup, which is in negotiations with the Federal Deposit Insurance Corp., and smaller regional banks Colonial BancCorp and Riverview Bancorp.

JPMorgan is expecting to report strong quarterly numbers on Thursday, solidifying its place as the strongest major commercial bank. While its credit card businesses are struggling, the bank’s other financial endeavors are reaping rewards.

“While some banks have spent the cycle shrinking to survive, JPMorgan has been investing, acquiring and expanding,” John McDonald, a banking analyst at Sanford C. Bernstein & Co., wrote in a recent report.

CEO James Dimon was furious when the government banned firms that received TARP funds from hiring foreigners to work in U.S. offices. He was increasingly irked whenever the government referred to the firm as a ‘bailed-out bank.’

The company is also in disagreement with the White House’s financial plan that deals with the regulation of derivatives. The bank’s derivatives contracts were valued at approximately $81 trillion at the end of the first quarter, representing 40 percent of the derivatives held by banks, according to the Office of the Comptroller of the Currency. The bank has played down any risk from the contracts, saying the notional value doesn’t indicate that there is high risk associated.

JPMorgan made a bold move after hiring William Rifkin, one of Wall Street’s best-known investment bankers, away from Bank of America. Rifkin was also named vice chairman of its mergers-and-acquisitions department.

Steven Rattner, chief architect of the bailouts of General Motors and Chrysler, is leaving the Obama administration after less than six months serving as auto czar, reports The Wall Street Journal.

Rattner, a former investment banker and onetime partner of the New York private-equity firm Quadrangle Group, has worked hands-on during the bailouts hits and misses. His efforts led to revamps that cut thousands of jobs while eliminating debt burdens. He received criticism from those who objected to the government’s intervention in the automobile industry.

The overall cost could run the U.S. government $100 billion. Rattner was believed to be interested in starting a political career of his own. When he was first appointed by the Treasury in February, Rattner’s duties clearly indicated that his responsibilities would lie beyond the automobile sector.

It is unclear what his future plans will bring as his resignation comes as the New York attorney general’s office has intensified scrutiny of Quadrangle Group, including Rattner.

There is no indication that Rattner’s return to New York is a result of the ensuing probe.

Markit, a provider of market data, claims that the Department is looking into the formerly popular investment vehicles, though no official investigation has yet been announced. Markit provides derivative and bond information to over 1,500 customers, and is owned by such Wall Street firms as JPMorgan Chase and Goldman Sachs.

The DoJ’s antitrust division sent a notice to the owners of Markit to determine if they have unfair access to pricing data.

Said a Markit spokesperson, “We will work with the Department to provide any information requested of us.”

UBS and the governments of the U.S. and Switzerland are in talks to settle a major tax-evasion case that could require the Swiss bank to reveal some of the 52,000 account-holder names the U.S. has brought, reports The Wall Street Journal.

The talks would not reveal all of the names, but those mentioned could lead to criminal prosecutions of U.S. clients. UBS could turn over some names to the IRS if actual fraud under Swiss law could be cited in the accounts.

Evidence for fraud is one way for Swiss banks to disclose names without violating secrecy. In February, the Justice Department sued to gain access to the 52,000 accounts. But some 7,000 accounts are more likely to be subject to the settlement because they are tied to offshore companies and trusts—which are more susceptible to fraud.

Chief Executive Oswald Grübel, who took over in February, said the IRS’s demand for information “puts UBS in an untenable position, caught between the laws of two sovereign nations.”

Baker & Hostetler and partner Irving Picard, who was appointed trustee of the Madoff firm last year, asked a bankruptcy judge to approve nearly $15.5 million in fees for its work in the case, reports The Wall Street Journal.

In the fee request, the firm and Picard, cited closing down Madoff’s operations and coordinating efforts with federal authorities investigating the Ponzi scheme.

The request was filed in a Manhattan bankruptcy court. Baker requested $14.7 million, while Picard sought an additional $759,000, or nearly $700 an hour.

Geithner’s comments came after a meeting with United Kingdom Finance Minister Alistair Darling. The Treasury secretary is in the midst of an international economic campaign that will take him through the Middle East and Paris.

“In my view there are still significant risks and challenges ahead,” said Geithner in answering a question regarding the possibility of a recurring recession drop.

“I think we have a remarkably strong consensus in place on core elements,” said Geithner following his talk with Darling.

One topic of question is whether the large wireless companies are behaving unfairly by locking up popular phones—such as Apple’s iPhone—through exclusive hardware contracts, thus shutting out smaller rivals.

AT&T and Verizon hold a combined 60 percent of the telecommunications market, which includes 90 million landlines and over 160 million wireless subscribers.

The DoJ has demonstrated that it is looking to reverse the softer antitrust rules of the Bush administration, with Antitrust Chief Christine Varney having explicitly claimed so. The DoJ is also investigating the health care and agricultural industries, as well as Internet search giant Google.

General Motors CEO Frederick “Fritz” Henderson plans to introduce a greener, more customer-focused company with a leaner management team, reports The Wall Street Journal.

After being bailed out by the American taxpayer, the company plans to unveil a fleet of new products aimed at changing the company’s previous image as a dominant figure of the truck market and unfriendly to emissions legislation. Compact Chevrolets, small Buicks, and battery-powered Chevrolet Volt are among some of the new products the carmaker plans to offer.

Approximately 4,000 white-collar workers are expected to be laid off by October, and not offer jobs to about a third of the management team. These steps are only the beginning for the struggling company, soon to be 60 percent owned by the U.S. government.

By the end of 2009, the U.S. government will have put up more than 450 billion into GM and more than $12 billion to Chrysler, along with tens of billions more to suppliers, lenders, and GM’s former credit company, GMAC.

The Obama administration is relying heavily on the appointment of Edward Whitacre, former CEO of AT&T, as GM’s first independent, nonexecutive chairman since the mid-1990s. He was the government’s choice primarily because it didn’t believe GM’s current management team could properly oversee operations or deliver quick results.

The Justice Department said Swiss bank UBS has “systematically and deliberately” violated U.S. law by dispatching private bankers to recruit wealthy Americans in evading taxes and must reveal the identities of 52,000 of those clients, reports The Associated Press.

The filing asks U.S. District Judge Alan S. Gold to hold UBS accountable for conducting years of illegal business in the U.S. Such business earned the bank more than $100 million in fees but the U.S. did not receive hundreds of millions of dollars in unpaid taxes.

“It is time for UBS to face the consequences that it has brought upon itself,” said Justice Department tax attorney Stuart Gibson in the 55-page filing. “The United States has proven its case for enforcement.”

UBS spokesperson Karina Byrne said the bank is “open to an appropriate solution.”

The Internal Revenue Services summons seeks the identities of all U.S. taxpayers who had an “undeclared” account at UBS between 2002 and 2007. UBS wrote to its U.S.-based clients in March and April telling them to close their accounts within weeks and transfer any money to a specially created U.S. unit, to another bank, or to withdraw the funds. That grace period ends July 2.

UBS previously received a deferred prosecution agreement with the Justice Department in which is agreed to disclose the identities of up to 300 U.S. clients and pay $780 million to the U.S. government.

Accountant Steven Michael Rubinstein, one of the 300 clients, plead guilty last week in Fort Lauderdale federal court to charges of filing a false tax return and faces up to three years in prison.

Wall Street firms have cut back their spending due to damaged public perception of many of the money-losing banks and other financial firms. “We have lost our credibility,”  said Mortgage Bankers Association President John Courson.

Courson relayed the following quote from House Financial Services Committee Chairman Barney Frank: “Everybody hates you, and now they’re starting to hate me for hanging out with you.”

The financial services industry made only $19.9 million in political contributions in the first three months of 2009, down 65 percent from figures in 2007, and possibly related to the concluded presidential race.

The proposal was originally announced in March by Governor Zhou Xiaochuan, adding to speculation that China had plans to diversify its $1.95 trillion in currency reserves, which is the world’s largest.

“To avoid the inherent deficiencies of using sovereign currencies for reserves, there’s a need to create an international reserve currency that’s delinked from sovereign nations,” the review said.

At a meeting June 16 in the Russian city of Yekaterinburg, Russian President Dmitry Medvedev, Chinese President Hu Jintao, Indian Prime Minister Manmohan Singh, and Brazilian President Luiz Inacio Lula da Silva called for a reduction of dependency on the U.S. dollar. U.S. Treasury Department data shows that China reduced its holdings by $4.4 billion to $763.5 billion in April.

The two units, American Life Insurance (ALICO) and American International Assurance (AIA Group) will be spun off into special purpose vehicles which will eventually undergo initial public offerings.

The New York Fed will get a $16 billion stake in ALICO and a $9 billion stake in AIA Group.

In addition to the $40 billion loan AIG received from the New York Fed, the insurer also took $40 billion in Troubled Asset Relief Program funding, as well as an unrelated $85 billion loan.

AIG has also said it will spin off a third unit, AIU Holdings, in further efforts to reduce its government debt.

The Federal Reserve resumed a two-day meeting today that is expected to end with a statement emphasizing the U.S. economy’s delicate state, reports Reuters.

The Fed official told Reuters that the meeting resumed this morning at 9 a.m. A statement outlining the U.S. central bank’s thinking on the economy and monetary policy is due at about 2:15 p.m. today.

Economists expect the Fed to hold the overnight federal funds rate in a zero to 0.25 percent range, the level reached in December.

Not much is expected to change regarding plans to purchase $300 billion of longer-dated U.S. government bonds and $1.45 trillion of mortgage debt, an effort it has launched to drive down borrowing costs set in financial markets.

Warren Buffett and his company Berkshire Hathaway Inc. are expected to maintain their $5 billion investment in Goldman Sachs Group Inc. until at least 2011, according Reuters. Buffett acquired preferred shares and warrants to buy common stock at $115 per share, last September, when Lehman Brothers Holdings Inc. collapsed. Common stock shares in Goldman Sachs declined to $47.44 by November, but have recovered to $143.09 as of June 18.

Goldman Sachs recently repaid $10 billion of TARP funds to the US government and expects 2009 profits and bonuses to reach a new high, according to the Guardian. Buffett’s presence at the investment bank is not felt as much as the government’s because of Buffet’s hands-off investment style. Critics questioned the famed investor’s decision at the time as the stock markets worldwide continued record sell-offs, but present market conditions and recent rallies have proven Buffet right, so far.

Goldman Sachs CEO, Lloyd Blankfein, and other executives at the investment firm have agreed not sell more than 10% their shares until October 2011 when Buffet can convert his warrants into common stock.