WASHINGTON President Barack Obama on Saturday called on the U.S. Congress to back his efforts for tough new financial industry oversight, saying a $2 billion trading loss at JPMorgan underscored the need for such regulation.
"We've got to finish the job of implementing this reform and putting these rules in place," Obama said in a weekly radio address that accused some on Wall Street of causing the 2007-2009 economic crisis because they "treated our financial system like a casino."
In a jab at Republicans who have been critical of banking industry reforms his administration is in the process of implementing, Obama said lawmakers should "stand on the side of reform, not against it."
The Democratic president is seeking re-election on November 6 seeking to show he is willing to take a hard stance against Wall Street excesses but without being seen as discouraging investment.
Many Republicans in Congress have taken aim at Wall Street reform measures, saying they are unwieldy and could end up slowing investment and economic growth.
Obama said that while JPMorgan had the resources to handle losses of more than $2 billion, smaller banks might not have been able to do so. Without the new banking industry reforms, Obama said U.S. taxpayers could again "be on the hook for Wall Street's mistakes."
The deep economic recession the United States has recently begun climbing out of brought U.S. government bailouts of some large financial institutions, as well as heavy job losses, business failures and home mortgage foreclosures as the downturn spread.
The Dodd-Frank financial oversight law enacted in response to the financial crisis includes the Volcker rule, which bans banks from making speculative bets with company money. But it includes an exemption for trades done to hedge risk.
The Wall Street Journal reported on Wednesday that the JPMorgan loss prompted the White House to encourage Treasury Department officials to ensure tough enforcement of Dodd-Frank.
Obama complained that Republicans in Congress, in tandem with financial industry lobbyists, "have actually been waging an all-out battle to delay, defund and dismantle Wall Street reform."
Saying he backed free-market forces, Obama said some safeguards needed to be put in place to guarantee fair play.
"Unless you run a financial institution whose business model is built on cheating consumers or making risky bets that could damage the whole economy, you have nothing to fear from Wall Street reform," he said.
(Reporting By Richard Cowan; Editing by Peter Cooney)