President Barack Obama made renewed calls for Congress to stand "on the side of" Wall Street reform in his weekly address Saturday, stating firms have nothing to fear unless they're out to defraud the American people.
"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," the president stated. "That's what Wall Street reform is all about - making this economy stronger for you."
The president's calls for reform come as JPMorgan Chase & Co admitted to a $2 billion dollar loss last week due to a failed derivatives trading strategy on synthetic credit products. The strategy was given the seal of approval by CEO Jamie Dimon.
That "egregious" failure, as Dimon called it, could balloon up to $5 billion and has cued the Federal Reserve to audit all banks' cash management procedures. Dimon has also agreed to testify to a Senate committee on the incident while the Justice Department and FBI have begun a criminal investigation into the loss.
Without mentioning the bank by name in his address, 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."
"That's why it's so important that Members of Congress stand on the side of reform, not against it; because we can't afford to go back to an era of weak regulation and little oversight...We've got to finish the job of implementing this reform and putting these rules in place."
The financial system reforms to which Obama is referring, the Dodd Frank bill passed in 2010, requires banks to hold more cash on hand and to create a "living will" detailing how a bank would "wind down" if it was to fail.
The law also puts restrictions on bonuses and creates a consumer watchdog to search out unfair practices. But the most contentious part of the law is the Volcker Rule, which bars banks from speculative betting unless made to hedge risk.
Many of these reforms have yet to be implemented or given strong enough teeth. With the economy the top issue of this year's presidential general election, this issue will remain a top campaign issue for President Obama in the coming months.
by RTT Staff Writer
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