Obama's bank comments not a signal of new rules: White House
WASHINGTON (Reuters) - President Barack Obama's recent comments on the need for more bank regulation were intended to underscore the need to keep close watch over market risks rather than to signal a new policy initiative, a White House spokesman said on Thursday.
"He wasn't referring to any specific regulation or law that he had in mind but rather the need to continue to vigilantly monitor financial markets to assess risks that may be emerging and to ensure that the necessary regulatory protections are in place," White House spokesman Josh Earnest told reporters at a briefing.
Obama's comments in a radio interview on Wednesday sparked speculation that he may be considering new constraints on banks and trading activity.
He made his remarks just a few weeks before the four-year anniversary of the enactment of the Dodd-Frank Wall Street reform law, which was passed in response to the 2007-2009 financial crisis and marked the biggest regulatory overhaul since the Great Depression.
Four years later, U.S. regulators are still working to implement the hundreds of new rules required by Dodd-Frank targeting banks.
Obama said on Wednesday that more work is needed beyond those rules to address risks posed by traders who are able to earn big bonuses, but still avoid taking a hit when bets go sour.
However, the White House on Thursday played down the idea that the president has additional steps in the works.
"He's not referring to some specific plan," Earnest said.
The president believes that regulatory protections need to be able to keep up with a fast changing financial system and be able to spot asset bubbles before they become a threat to the stability of the system, Earnest told reporters.
The president will push at international summits such as the G20 for rules to be applied evenly across global markets, the spokesman said.
"After all we can’t just raise financial standards in this market when you have such a globally interconnected financial system," he said.
Despite the protections afforded by the Dodd-Frank law, Obama believes that more can be done in certain areas, the spokesman added.
One such area is the so-called "shadow-banking system," a reference to institutions that perform the same functions as banks such as lending, but are not subject to the same oversight.
Another activity is high-frequency trading, and whether some investors can manipulate the system to gain an unfair advantage, Earnest said.
The U.S. Securities and Exchange Commission has been exploring for several years whether to adopt new rules to rein in high-speed traders. The debate was reignited this spring when bestselling author Michael Lewis published a book claiming the market is rigged by high-speed traders who front-run investors.
SEC Chair Mary Jo White has said her agency is probing potential misconduct in the high-speed trading area, and she also recently announced plans to propose rules targeting disruptive trading behavior.
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