New York Times
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WASHINGTON
- President Obama urged the nation's top financial regulators on Monday
to move faster on new rules for Wall Street, telling them in a private
White House meeting that they must work to prevent a repeat of the 2008
financial crisis.
Obama Presses for Action on Bank Rules
Win Mcnamee/Getty Images
Obama Meets With Financial Regulators:
Three years after President Obama signed a financial reform law known as
the Dodd-Frank act, John Harwood of CNBC reported details from a
closed-door meeting on the status of the law’s implementation.
By MICHAEL D. SHEAR and PETER EAVIS
Published: August 19, 2013
WASHINGTON — President Obama
urged the nation’s top financial regulators on Monday to move faster on
new rules for Wall Street, telling them in a private White House
meeting that they must work to prevent a repeat of the 2008 financial
crisis.
Mark Wilson/Getty Images
Ben Bernanke, left, chairman of the Federal Reserve;
Jacob Lew, the Treasury secretary; and other top financial officials met
on Monday with President Obama.
Daniel Rosenbaum for The New York Times
Senator Elizabeth Warren is among the lawmakers who
have raised concerns that regulators are not moving quickly enough.
Aides said Mr. Obama also told the regulators that the United States
needed a more simplified and certain system of financing housing. The
president recently endorsed proposals to reduce the government’s role in
providing mortgages.
Administration officials and some lawmakers have expressed frustration
that critical parts of Mr. Obama’s overhaul of the financial system,
which was voted into law three years ago and is known as the Dodd-Frank
act, remain unenforced as an alphabet soup of federal agencies wrangle
over how to adopt it.
In particular, top presidential aides have highlighted the failure in putting the Volcker Rule into effect. It would prohibit banks from risking institutional money in certain speculative investments. Last month, Jacob Lew,
the Treasury secretary, complained in a speech that the regulators were
moving too slowly to confront the dangers of banks that are so large
that governments cannot allow them to fail for fear of bringing down the
economy.
“If we get to the end of this year, and cannot, with an honest straight
face, say that we’ve ended ‘too big to fail,’ we’re going to have to
look at other options because the policy of Dodd-Frank and the policy of
the administration is to end ‘too big to fail,’ ” Mr. Lew said.
The meeting on Monday was an attempt to raise those concerns directly
with the agencies that are responsible for turning the law into reality.
Among those in attendance were Mr. Lew; Ben S. Bernanke,
the chairman of the Federal Reserve; and top officials at the Federal
Housing Finance Agency, the Consumer Financial Protection Bureau, the
Securities and Exchange Commission, the Commodity Futures Trading
Commission, the Federal Deposit Insurance Corporation and the National
Credit Union Administration.
Josh Earnest, a White House spokesman, said Mr. Obama wanted to convey
“the sense of urgency that he feels about getting these regulations
under Wall Street reform implemented promptly.”
“There are some important rules that have been put in place,” he added. “More work needs to be done.”
Congress passed Dodd-Frank in 2010 in response to the financial crisis
of 2008. Since then, regulators have been working to turn the mammoth
law into workable regulations, often in the face of opposition from
lobbyists for banks that opposed the law.
Among the rules that have yet to be put into effect, according to
Treasury Department officials, are enhanced prudential standards for
banks and certain other institutions, capital and margin rules for
derivatives, new mortgage disclosure regulations and the Volcker Rule.
Treasury officials said they expected regulators to finish work in those
areas by the end of the year.
As the banks have returned to profitability, the Obama administration
has sounded increasingly impatient about the pace of bank regulation.
Its desire to speed things up comes at what appears to be an opportune
time. The fear that banks are too big, and could jeopardize the wider
economy if they fail, is shared by people on both the left and right.
Congress has introduced two bills in recent months that envision far
more drastic overhauls than Dodd-Frank, both with bipartisan support.
“The politics are pretty good for the administration if they can do
something on this,” Nolan McCarty, a professor of politics and public
affairs at Princeton.
Some lawmakers also have expressed concern that the regulators are moving too slowly. Senator Elizabeth Warren,
Democrat of Massachusetts, and several other senators have proposed new
laws that would reinstate a firewall between banks and investment firms
like those in the Depression-era Glass-Steagall Act.
Senators David Vitter, Republican of Louisiana, and Sherrod Brown,
Democrat of Ohio, have introduced separate legislation that would
increase the amount of capital that the nation’s biggest banks are
required to carry.
“For too long, financial watchdogs were asleep on the job, allowing Wall
Street megabanks to become too complex to manage and regulate and ‘too
big to fail,’ ” said a spokeswoman for Senator Brown.
She said Senator Brown was “hopeful that today’s meeting will lead to
progress in ensuring that taxpayers and our financial system are no
longer threatened by ‘too big to fail’ banks.”
The administration may also want to sound the right notes as the
financial crisis’s fifth anniversary approaches. The bankruptcy of
Lehman Brothers, the event blamed for paralyzing the world financial
system, occurred on Sept. 15, 2008. The fact that many rules have not
been completed so long after Lehman’s failure could be a source of
embarrassment to the administration and regulators.
“They certainly don’t want that story dominating things over the next
couple of months,” said Marcus Stanley, policy director of Americans for
Financial Reform, a group that has called for stricter regulation of
financial firms.
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