WASHINGTON — President Obama on Monday defended his administration's record on financial reform and the performance of officials he put in charge of implementing it, responding to critics in both parties who have claimed that the financial system is less safe since the 2008 financial crisis.
"It is popular in the media, and political discourse both on the left and on the right to suggest that the crisis happened and nothing changed. That is not true," Obama said at the White House Monday afternoon, flanked by heads of top financial regulatory agencies. "We did not just rebuild this, we rebuilt it better, and we've rebuilt it stronger."
Obama met Monday morning with Treasury Secretary Jack Lew, Federal Reserve Board Chair Janet Yellen, Consumer Financial Protection Bureau Director Richard Cordray, Comptroller of the Currency Thomas Curry, Federal Deposit Insurance Corp. Chairman Martin Gruenberg, Securities and Exchange Commission Chair Mary Jo White, Commodity Futures Trading Commission Chairman Timothy Massad and National Credit Union Administration Chairman Debbie Matz.
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In almost any other election cycle, bankers would be celebrating the fact that a Republican candidate has emerged so far in front of the pack and would quickly fall in line behind him. But this has been anything but a normal election cycle, and there are a whole host of reasons that bankers will be at least as reluctant to embrace the outspoken businessman Donald Trump as the Republican establishment has been.
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Obama offered unusually expansive comments about the Dodd-Frank Act and his apparent frustration with the persistent notion in the public that little has been done to prevent a future crisis.
"When you read articles — either on the left or the right — that suggest somehow nothing happened, and everybody just went back to the go-go years they were engaging in before, those are factually incorrect. They're not true," Obama said. "And the reason I want to emphasize that is because when there's a perception that nothing happened, that feeds cynicism. That actually weakens our ability to make further progress in regulating this sector."
Obama said that banks now hold far greater capital reserves today than they did leading up to the crisis — "as much as $700 billion worth of additional capital," he said. He also came close to claiming that regulators had ended "too big to fail," saying that "we can engage in an orderly unwinding of that institution without having taxpayers … come in and bail it out."
The president also said stronger regulation of the derivatives markets has made the economy more resilient and has enabled regulators to better monitor potential wrongdoing. He also praised the CFPB, which he said has been "very effective in cracking down on some of the dishonest predatory practices that financial institutions were engaging in and that, in part, led to the crisis."
"By the end of this year we are likely to have achieved all of the goals that we set out in terms of firming out the financial system, making it much more secure and making sure some of the excesses … that took place can't occur in the future," Obama said.
But Obama pointed to several critical areas where he said work remains unfinished. First, he said, regulators need to make progress in completing an executive compensation rule meant to discourage excessive risk-taking. An interagency rule that was first proposed in 2011 has been sidelined for years.
Obama also cited the potential risks of shadow banking — financial institutions that move into traditionally bank-dominated businesses but that lack equal regulatory oversight. He said regulators may need additional legislation passed by Congress to "make sure we are covering some of those potential gaps." But he did not elaborate on what exactly such legislation would look like. Obama also cited cybersecurity as an area of potential vulnerability.
In his remarks, Obama also chastised congressional Republicans for what he said was their unwillingness to adequately fund bank and market regulators, as well as their attempts to undo regulations.
"Whether you are a Republican or a Democrat or a Tea Party member or a Socialist, if you are concerned about making sure that Wall Street is doing the right thing, check to make sure your member of Congress is not trying to cut the budgets of these various agencies … or roll back the authorities that were created in Dodd-Frank," Obama said. "That should be the target of your concern and your wrath."
