In his weekly radio and Internet address, Obama said "we need commonsense rules that will our allow markets to function fairly and freely while reining in the worst practices of the financial industry."
That, he said, is the central lesson of the current financial crisis that has cost millions of Americans their jobs and nearly caused the collapse of the entire financial system.
"And we fail to heed that lesson at our peril," Obama said.
The Senate Banking Committee is set to begin debate on a more than 1,300-page bill authored by its chairman, Christopher Dodd, D-Conn., that would give the government unprecedented powers to split up firms that threaten the economy, force the industry to pay for its most spectacular failures and create an independent consumer watchdog.
Already, Obama said, industry lobbyists are gearing up to spend millions of dollars in an attempt to defeat the legislation.
"In fact, the Republican leader in the House reportedly met with a top executive of one of America's largest banks and made thwarting reform a key part of his party's pitch for campaign contributions," Obama said.
The president said he remains a "vigorous defender" of free markets.
"But what we have seen over the past two years is that without reasonable and clear rules to check abuse and protect families, markets don't function freely," he said.
On the Net:
Obama address: http://www.whitehouse.gov