Obama meets bank regulators over Wall Street rules
WASHINGTON (AP) — President Barack Obama met Monday with top financial regulators at the White House to discuss progress implementing Wall Street rules, a year after warning that bank overseers needed to display more urgency about limiting risky practices in the financial industry.
The meeting included new Federal Reserve Chair Janet Yellen, who has signaled an aggressive stance by the Fed toward regulation of big banks. The session comes four years after Obama signed a sweeping overhaul of lending and high-finance rules in the wake of the 2008 banking crisis.
Obama a year ago voiced concern about the slow pace with which new rules were being adopted. At the time, regulators had completed rules on only 40 percent of the nearly 400 missed regulation required by the law.
So far this year, 55 percent have been finalized and rules have been proposed for 21 percent. Nearly a quarter of the regulations called for in the law have not yet been proposed, according to an analysis by the law firm of Davis Polk, which has been tracking progress on the bill.
Among rules enacted since Obama pushed for action last year is a ban on the largest banks from trading for their own profit in most cases. That regulation, known as the Volcker rule, is considered one of the more significant changes to financial laws because it seeks to rein in high-risk trading on Wall Street. Though adopted, however, that rule won't take effect for the biggest banks until mid-2015.
Some supporters of the law, such as former chief regulator Sheila Bair, have complained about the slow pace of the regulatory writing effort. Bair, a former chair of the Federal Deposit Insurance Corp., has said the financial system is safer but said some financial institutions are bigger and more concentrated than before the crisis.
Yellen has suggested that the current regime of rules under the 2010 legislation may not be sufficient to prevent the kind of risk-taking that touched off the financial crisis and nearly toppled the banking system.
Yellen said recently that the biggest banks operating in the U.S. may need to hold additional capital to withstand periods of financial stress, and that firms that aren't banks but have deep reaches into the financial system might also need to meet tougher rules. Those firms include money-market mutual funds, private equity and hedge funds, a point Bair has also made.
At a Senate hearing last month, Fed Gov. Daniel Tarullo outlined several proposals that regulators are working on which would push the biggest U.S. banks to shrink and become less of a risk to the financial system. The proposals include imposing additional capital requirements for the eight largest banks that exceed the levels mandated by international regulators. That means the banks would have to set more reserves aside and raise more money to increase their cushions against unexpected losses.
Associated Press Business Writer Marcy Gordon contributed to this report.