The threat of a meltdown is long over and the markets are rebounding, but Mr. Obama needed to ask the industry to support his proposals for regulatory reforms. Those proposals remain stuck in Congress because many powerful members take campaign donations from financiers.
Despite the crisis, Wall Street is still thinking short-term – as usual, only to the next quarterly report. And from its perspective, the industry has reined in many excesses of past risk-taking.
Banks now hold more money in reserve. Borrowers seeking loans are under closer scrutiny. More bonuses are tied to actual results. Complex financial instruments are more transparent.
Yet the task of preventing another financial meltdown remains with government, which has a longer-term memory. Many of Obama's proposals would hold Wall Street more accountable for taking on too much risk and putting the financial system in jeopardy. Mortgages would be easier to read, for instance, and regulators could act more quickly to keep big institutions from failing.
"Restoring a willingness to take responsibility – even when it is hard to do – is at the heart of what we must do," Obama said.
But even he acknowledges that the origins – or blame – for this crisis are so widespread that better regulation will only go so far. "It was a collective failure of responsibility in Washington, on Wall Street, and across America that led to the near collapse of our financial system," he said.
At many levels of society, a reckless risk-taking in borrowing and speculating had risen sharply, caused by a common complacency. Too many people thought markets, especially in housing, would always rise and that greater transparency in the level of risks wasn't really needed. A belief had settled in that government knew how to smooth out the business cycles and how to keep recessions short and shallow.
As a result, the president now says that what's needed "goes beyond just the reforms." The crisis was fundamentally a breach of trust at many levels of business and by government.
And now government can only do so much to restore it.
"One of the most important ways to rebuild the system stronger than before is to rebuild trust stronger than before – and you don't have to wait for a new law to do that," Obama said. Corporate boards can ask shareholders to vote on compensation for executives, for example, and bonuses can be tied to long-term results.
But even deeper than restoring trust is a need for a new kind of self-control by members of the financial community. They must regain a respect for the possibility of failure in investments and in the general economy. Long periods of prosperity should not be allowed to create a false impression of stability that then drives up risk to delusional heights. And fancy computer models that claim to spread risk widely should not be relied on as the final wisdom on the behavior of markets – and end up creating the very risks they were designed to avoid.
Fortunately, a movement has started at America's business schools to better learn the kind of integrity that might avoid the use of excess debt and dangerous leveraging in financial instruments.
Last spring, a group of Harvard Business School students wrote an oath for MBA students to sign online (mbaoath.org). The oath aims to guide future business leaders to prevent the kind of crisis that befell the global markets in 2008.
As a sort of Hippocratic Oath to do no harm for society's larger interest in capitalism, the pledge has been signed by hundreds so far. It builds on ethics courses taught at business schools – many of them still voluntary, not mandatory – that were introduced after the Enron scandal. But also, there seems to be more social consciousness among today's graduates.
A mix of better government regulations, self-reform by the industry, and an individual commitment to seek profits within society's larger interests are all needed.
Before memories fade about the crisis triggered by the Lehman Brothers collapse on Sept. 15 last year, more is needed of all three reforms.