WASHINGTON -- President Barack Obama on Monday urged the nation's top financial regulators to move faster on new rules for Wall Street, telling them in a private White House meeting that they must work to prevent a repeat of the 2008 recession.
Aides said Mr. Obama also told the regulators that the United States needed a more simplified and certain system of financing housing. The president recently endorsed proposals to reduce the government's role in providing mortgages.
Administration officials and some lawmakers have expressed frustration that critical parts of Mr. Obama's overhaul of the financial system, which was voted into law three years ago and is known as the Dodd-Frank act, remain unenforced, as an alphabet soup of federal agencies wrangle over how to adopt it.
In particular, top presidential aides have highlighted the failure in putting the Volcker Rule into effect. It would prohibit banks from risking institutional money in certain speculative investments.
Last month, Treasury Secretary Jacob Lew complained in a speech that the regulators were moving too slowly to confront the dangers of banks so large that governments cannot allow them to fail, for fear of bringing down the economy. "If we get to the end of this year and cannot, with an honest straight face, say that we've ended 'too big to fail,' we're going to have to look at other options, because the policy of Dodd-Frank and the policy of the administration is to end 'too big to fail,' " he said.
The meeting Monday was an attempt to raise those concerns directly with the agencies that are responsible for turning the law into reality. Among those in attendance were Mr. Lew; Federal Reserve chairman Ben S. Bernanke; and top officials at the Federal Housing Finance Agency, the Consumer Financial Protection Bureau, the Securities and Exchange Commission, the Commodity Futures Trading Commission, the Federal Deposit Insurance Corp. and the National Credit Union Administration.
White House spokesman Josh Earnest said Mr. Obama wanted to convey "the sense of urgency that he feels about getting these regulations under Wall Street reform implemented promptly. There are some important rules that have been put in place," he added. "More work needs to be done."
Congress in 2010 passed Dodd-Frank -- named for former House Financial Services Committee chairman Barney Frank, D-Mass., and former Senate Banking Committee chairman Christopher Dodd, D-Conn. -- in response to the financial crisis of 2008. Since then, regulators have been working to turn the mammoth law into workable regulations, often in the face of opposition from lobbyists for banks that opposed the law.
Among the rules that have yet to be put into effect, according to Treasury Department officials, are enhanced prudential standards for banks and certain other institutions; capital and margin rules for derivatives; new mortgage disclosure regulations; and the Volcker Rule. Treasury officials said they expected regulators to finish work in those areas by year's end.
As the banks have returned to profitability, the Obama administration has sounded increasingly impatient about the pace of bank regulation. Its desire to speed things up comes at what appears to be an opportune time. The fear that banks are too big, and could jeopardize the wider economy if they fail, is shared by people on both the left and right.
Congress has introduced two bills in recent months that envision far more drastic overhauls than Dodd-Frank, both with bipartisan support. "The politics are pretty good for the administration if they can do something on this," Nolan McCarty, a Princeton University professor of politics and public affairs.
Some lawmakers also have expressed concern that the regulators are moving too slowly. Sen. Elizabeth Warren, D-Mass., and several other senators have proposed new laws that would reinstate a firewall between banks and investment firms such as those in the Depression-era Glass-Steagall Act. Sens. David Vitter, R-La., and Sherrod Brown, D-Ohio, have introduced separate legislation that would increase the amount of capital that the nation's biggest banks are required to carry.
"For too long, financial watchdogs were asleep on the job, allowing Wall Street megabanks to become too complex to manage and regulate and 'too big to fail,' " a Brown spokeswoman said. She said Mr. Brown was "hopeful that today's meeting will lead to progress in ensuring that taxpayers and our financial system are no longer threatened by 'too big to fail' banks."
The administration may also want to sound the right notes as the financial crisis' fifth anniversary approaches. The bankruptcy of Lehman Bros., the event blamed for paralyzing the world financial system, occurred on Sept. 15, 2008. The fact that many rules have not been completed so long after Lehman's failure could be a source of embarrassment to the administration and regulators.
"They certainly don't want that story dominating things over the next couple of months," said Marcus Stanley, policy director of Americans for Financial Reform, a group that has called for stricter regulation of financial firms.nation