(Politico) – President Barack Obama on Wednesday said that “further reforms” of Wall Street are needed, arguing that there remains too much focus on making profits through big banks’ trading desks as opposed to investing in companies and the “real” economy.
Obama said in an interview with the Marketplace radio show that the 2010 Dodd-Frank law put in place important policies to safeguard against another financial crisis but that more can be done, without offering any specific proposals.
“Right now, if you are in one of the big banks, the profit center is the trading desk, and you can generate a huge amount of bonuses by making some big bets; you will be rewarded on the upside,” he said in the interview, a transcript of which was published on the program’s website. “If you make a really bad bet, a lot of times you’ve already banked all your bonuses. You might end up leaving the shop, but in the meantime everybody else is left holding the bag. Now what we’ve been able to do is to try to prevent taxpayers from being the folks who are left holding the bag. But it’s still not a real efficient way for us to run a financial system. That’s going to require some further reforms. That’s going to require us looking at additional steps that we can take.”
The president’s comments are significant because since the enactment of Dodd-Frank, Obama administration officials have mostly preached patience while the law is being implemented to those calling for more to be done to crack down on big banks.