Obama urged Congress to help finalize regulations mandated by the Dodd-Frank Wall Street reform laws passed by Democrats two years ago – the same legislation targeted for repeal by the GOP and presumptive nominee Mitt Romney.
In his weekly radio and Internet address, Obama said that JPMorgan Chase can handle its loss, but the same may not be true for other major financial institutions.
“We found out that a big mistake at one of our biggest banks resulted in a two billion dollar loss,” Obama said. “While that bank can handle a loss of that size, other banks may not have been able to. And without Wall Street reform, we could have found ourselves with the taxpayers once again on the hook for Wall Street’s mistakes.”
Obama was referring to the initial bailout vehicle of 2008, the Troubled Asset Relief Program (TARP), a controversial safety net for many failing institutions that included cash injections for even relatively healthy banks, such as JPMorgan Chase and Wells Fargo.
“Since then, we’ve recovered taxpayer dollars that were used to stabilize troubled banks,” Obama said.
The president said that Dodd-Frank provides “smarter, tougher, common sense rules” with the intent of preventing another crisis.
The Federal Reserve has initiated steps to strengthen supervision over large bank holding companies, including a range of measures covering requirements on capital and liquidity, credit exposure, stress testing and risk management – all actions mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act.
The proposed rules apply mostly to U.S. bank holding companies with consolidated assets of $50 billion or more, including JPMorgan Chase, Bank of America, Citibank and Wells Fargo.
But implementation of the so-called Volcker Rule to insulate proprietary trading by these big banks and curtail risk-taking has yet to be finalized by regulators.
Wall Street reform, the president said, “discourages big banks and financial institutions from making risky bets with taxpayer-insured money.”
And reform also encourages them to “actually help the economy – like extending loans to entrepreneurs with good ideas, to middle-class families who want to buy a home, to students who want to pursue higher education,” Obama said.