President Barack Obama says the big trading loss at JPMorgan Chase shows the need for Congress to put more teeth into Wall Street reforms intended to prevent the practices that led to the 2008 financial meltdown.
The $2 billion loss has renewed calls by Democratic lawmakers for tougher rules on major financial institutions.
“Without Wall Street reform, we could have found ourselves with the taxpayers once again on the hook for Wall Street’s mistakes,” Obama said in his weekly media address Saturday. He added: “We’ve got to finish the job of implementing this reform and putting these rules in place.”
Obama promoted rules that would require big banks or financial institutions to have more cash on hand to cover losses and that would take away big bonuses and paydays from failed CEOs.
The president said financial institutions that “aren’t cheating customers or making risky bets that could damage the whole economy” have nothing to fear from reforms.
“Yes, it discourages big banks and financial institutions from making risky bets with taxpayer-insured money. And it encourages them to do things that 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,” he said.
One focus of the financial oversight overhaul is a provision that restricts banks’ ability to trade for their own profit, a practice known as proprietary trading. It is named for Paul Volcker, a former Federal Reserve chairman. But a draft of the rule has failed to satisfy either banks, which says it would disrupt some of their core functions, or advocates of stronger regulation who say it would have prevented JPMorgan’s loss.
In the Republican’s weekly address, Wisconsin Sen. Ron Johnson faulted what he called a “do-nothing Senate” under Democratic Majority Leader Harry Reid of Nevada for the frustrations he said he has felt in his 16 months in Congress.
Noting that the Senate hasn’t passed a budget in three years, Johnson said House Republicans have fulfilled their responsibilities by passing a budget but that Senate Democrats have not fulfilled theirs.
This past week, the Senate rejected by a 99-0 vote a budget that Republicans offered up based on an Obama proposal in February. Four other budget plans also were voted down.