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Obama to Mark Lehman Collapse, Financial Recovery

A file photo shows Lehman Brothers Holdings Inc. signage illuminated at the then headquarters of Lehman Brothers in New York City, on September 15, 2008. Photographer: Mario Tama/Getty Images
A file photo shows Lehman Brothers Holdings Inc. signage illuminated at the then headquarters of Lehman Brothers in New York City, on September 15, 2008. Photographer: Mario Tama/Getty Images

Sept. 14 (Bloomberg) -- President Barack Obama plans to mark the five-year anniversary of the collapse of Lehman Brothers Holdings Inc. and talk about the economic gains made since then, according to a White House statement.

Obama has scheduled a speech in the Rose Garden on Sept. 16 and will warn against “more self-inflicted wounds from Washington” as Congress considers a new budget and debates an increase in the debt ceiling, according to the statement.

The scheduled remarks reflect a deliberate shift, as the White House turns its attention to looming budget battles with Congress after weeks of coping with Syria and its alleged use of chemical weapons.

Agreement between the U.S. and Russia on a plan intended to eliminate Syria’s chemical weapons “is a major victory” for Obama, said Paul Begala, a campaign strategist and adviser to former President Bill Clinton.

“I doubt, however, that even this foreign policy success will make things easier for the president domestically,” Begala said in an e-mail.

The Lehman Brothers bankruptcy filing on Sept. 15, 2008, helped trigger a global financial crisis and deepened an economic recession that became the worst since the Great Depression. It was followed by a plunge in the U.S. stock market and a $182 billion government bailout of the insurer American International Group Inc.

Government Intervention

The government intervened in the banking, insurance and auto industries as it revamped financial regulations. Obama proposed and Congress passed an $831 billion economic stimulus package.

The Standard & Poor’s 500 Index plunged 46 percent from the last trading day before the Lehman Brothers bankruptcy to a closing low of 676.53 on March 9, 2009.

Unemployment rates surged to 10 percent as the economy lost 8.7 million jobs between January 2008 and February 2010. Five years after the crash, the country hasn’t recovered all the jobs it lost and the unemployment rate stood at 7.3 percent in August.

The economy has made gains, including the creation of 7.5 million private-sector jobs. Obama will say that more needs to be done to strengthen the middle class “and those fighting to get into it,” according to the White House statement.

Obama said at a Sept. 6 press conference in Russia that he will press Republicans in Congress for “smart investments and fiscal responsibility” to keep the economy growing.

Default Risk

“That includes making sure we don’t risk a U.S. default over paying bills we’ve already racked up,” Obama said. “I’m determined that the world has confidence in the full faith and credit of the United States.”

An interview with Obama was scheduled to be broadcast Sunday, Sept. 15, on ABC’s “This Week” program, to talk about the economy and Congress, and on Sept. 18 he’s scheduled to speak in Washington to the Business Roundtable, the lobbying group of chief executive officers of large U.S. companies.

Obama’s Sept. 16 speech is aimed directly at Congress and multiple deadlines that lawmakers must meet to avoid a government shutdown on Oct. 1, the start of a new fiscal year, or risk a default on government debt as early as mid-October.

Some Republicans are pressing to rescind money for implementing Obama’s health-care law, a step the administration has said Obama would veto. Lawmakers are also $91 billion apart in approving bills to fund the government after Oct. 1, with no compromise in sight.

A government shutdown would mean payments to contractors would stop, federal workers would be furloughed and programs that aren’t deemed essential would be disrupted. Payments such as Social Security checks, however, would continue.

Obama, in his remarks Monday, will press Congress to approve spending bills to keep the government operating and to increase the $16.7 trillion debt limit.

To contact the reporters on this story: Roger Runningen in Washington at rrunningen@bloomberg.net; Mike Dorning in Washington at mdorning@bloomberg.net

To contact the editor responsible for this story: Steven Komarow at skomarow1@bloomberg.net

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