BERLIN, June 9 (Reuters) - Likely Republican presidential candidate Jeb Bush on Tuesday criticized the 2010 Dodd-Frank Wall Street oversight law, saying it did not stop banks from becoming “too big to fail” and may have contributed to new risks in the U.S. financial system.
Bush, the former governor of Florida, is expected to formally launch his bid for the White House on June 15, after he completes a five-day European trip.
Speaking in Berlin on Tuesday, Bush said reforms enacted in response to the 2007-2009 economic meltdown led to bigger banks and may have heightened risk in the U.S. financial system.
“We have more banks with more concentrated assets in the United States, and the systematic risk is perhaps greater now than it was when the law was signed,” Bush said.
“And so I would beware of regulations in general. I think they need to be thoughtful,” he said.
During the crisis, the biggest banks received government bailouts because regulators worried they were so big it would threaten financial market stability if they went under, a concept that came to be known as “too big to fail.”
The 2010 Wall Street law made a wide variety of changes to financial oversight, such as forcing banks to rely less on debt for funding, in order to bolster financial firms and prevent them from needing bailouts in the future.
Critics of the White House administration of Bush’s brother, George W. Bush, say tougher oversight of banks and the U.S. housing market could have prevented the crisis or lessened its impact.
But many critics of the 2010 law argue that instead of eliminating the “too big to fail” problem, the cost of complying with tougher rules forced smaller banks to shut down or sell themselves, resulting in fewer, more concentrated banks than before the meltdown.
Jeb Bush, who had long been expected to seek the presidency in the November 2016 U.S. election, said regulation was needed “around bad banks” to prevent another crisis that would hurt the middle class, but he said Dodd-Frank did not have the effect Congress desired.
Some seeking the Democratic nomination for the presidency, including former Maryland Governor Martin O’Malley and U.S. Senator Bernie Sanders, take the opposite view. They say Congress should go even further than it did with Dodd-Frank and break up the largest U.S. banks. (Reporting by Michael Nienaber; Writing by Emily Stephenson; Editing by Cynthia Osterman)