The Democrats want to tighten oversight of derivatives markets and protect consumers from abusive mortgages among other restraints, but need the support of Republican lawmakers.
"If there is one lesson that we've learned it's that an unfettered market where people are taking huge risks and expecting taxpayers to bail out when things go sour is simply not acceptable," Obama said.
Both sides said they believed a bipartisan package could be reached but there was little sign either gave ground on the financial reform plan at talks on Wednesday.
Republican congressional leaders said the bill would protect big banks, harm small banks and guarantee "endless taxpayer bailouts of Wall Street." After a major victory on healthcare reform in March, the president is shifting to financial reform as his top legislative priority. The issue is shaping up as a battleground for the November congressional elections, when the Democrats hope to tap into widespread popular anger at Wall Street.
A vote on financial regulation is expected in the Senate soon. Senate Republican leader Mitch McConnell slammed the bill.
"It will lead to endless taxpayer bailouts of Wall Street," he said after talks with Obama, House Republican leader John Boehner, Senate Democratic Leader Harry Reid, House of Representatives Speaker Nancy Pelosi and House Democratic leader Steny Hoyer.
Boehner told reporters: "My concern is that it protects the biggest banks in America and harms the smallest banks." Obama administration officials have argued that passing a reform bill is crucial to preventing a repeat of the 2008-2009 financial crisis that tipped the US economy into its worst recession in decades and unleased a global push for reforms.
Policymakers around the world are revising financial regulations affecting banks, insurers, hedge funds, exchanges, derivatives markets and asset management companies. Much of the international focus is on imposing a new tax on banks.
The International Monetary Fund is expected to make recommendations to G20 finance ministers in 10 days on forcing banks to contribute toward future bailouts. Obama has already proposed a bank levy, as have Britain, France and Germany.
JPMorgan CEO Jamie Dimon on Wednesday hit back at Washington as his firm reported quarterly earnings that beat forecasts, underscoring a Wall Street comeback.
Dimon groused about an Obama proposal to recoup taxpayer bailout costs through a $90 billion "financial crisis responsibility fee." "Let's all not call it a bank fee, and call it what it is, which is a punitive bank tax," Dimon told a conference call.
Republicans have seized on a part of the bill that would empower regulators to dismantle in an orderly way big financial firms that get into trouble. The idea is to prevent costly bailouts like the Bush administration's rescue of AIG, while averting disastrous bankruptcies like Lehman Brothers'.
The "orderly liquidation" plan, Republicans say, would allow more bailouts by preserving the potential for the US Treasury, the Federal Reserve and the Federal Deposit Insurance Corp. to step in to stabilize the financial system.
Senator Christopher Dodd, author of the Democratic bill, said Republicans' criticism of his plan is "poppycock." Their talking points attacking the bill are based on a polling memo on financial reform issued recently by Frank Luntz, a political strategist, Dodd said on the Senate floor.
The 17-page memo from Luntz on "The Language of Financial Reform" says, in part, "The single best way to kill any legislation is to link it to the Big Bank Bailout." Dodd said the memo and McConnell's attack on the bill were "straight from the Wall Street special interest playbook. And it's just a Wall Street lie. This bill ends bailouts."
A big fight has erupted as Senate Democrats seek to pass the bill, possibly by the end of this month. After meeting with Obama, Reid told reporters: "It's obvious that the Republicans are saying 'no' again to progress for America. We're going to move forward just as rapidly as we can with the bill." In the November congressional election, all 435 House seats and more than a third of the 100 Senate seats are up for grabs.
The House in December approved a sweeping financial reform bill, with no Republicans voting in support. It embraced many of changes first proposed by Obama in mid-2009.
Democrats will need some Republican support to get a bill through the Senate. Obama and Democratic leaders are targeting moderate Republicans such as Senators Judd Gregg and Bob Corker, who have already tried to forge a bipartisan bill.
Democratic aides said others who are seen as possibly voting for the bill are the Senate's two leading Republican moderates, Susan Collins and Olympia Snowe, as well as Senator George Voinovich of the economically depressed state of Ohio, who is retiring this year.
In addition to creating a "resolution authority" to wind down failing financial firms, the bill would toughen oversight of banks and capital markets and beef up consumer protections.
