In weekly address, president accuses rivals in Congress of blocking efforts for tighter regulation in wake of JP Morgan fiasco
President Barack Obama has attacked Republicans in Congress for waging an “all-out battle” against Wall Street reform, as he echoed calls for greater regulation in the aftermath of the JP Morgan fiasco.
In his weekly address, the president accused his political opponents of being in hock to bank lobbyists who are doing all they can to “delay, defund and dismantle” safeguards to prevent a future financial meltdown.
The comments come more than a week after JP Morgan Chase revealed a trading loss of $2bn, leading to calls for Wall Street watchdogs to be given more teeth.
Attacking the “breath-taking irresponsibility” that led to 2008’s financial crisis, Obama said such behaviour had “cost our economy millions of jobs, hurt middle-class families and left the taxpayer holding the bag”.
But attempts to stabilse troubled banks and tighten up regulation had been met by obstruction from “too many Republicans in Congress and an army of financial industry lobbyists”.
Following the JP Morgan revelation, authors of the so-called Volckers rule – designed to curtail risky bets such as the one that caused the bank’s recent woes – urged lawmakers to back tough new laws on trading.
Senators Carl Levin and Jeff Merkley accused Wall Street lobbyists of watering down the proposed regulation, which is due to be applied from July.
In his weekly address, Obama added that without such safeguards “taxpayers could again be left on the hook for Wall Street’s mistakes”.
He added: “We’ve got to finish the job of implementing this reform and putting these rules in place.”
The president is backing rules that would require big banks or financial institutions to have more cash on hand to cover losses. He is also calling for big bonuses to be taken away from failed banking bosses.
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.
Opponents in the banking community claim that tougher regulation would disrupt their core functions.
Jamie Dimon, the embattled chief executive of JP Morgan, has been one of the harshest critics of the Volcker rule.
Meanwhile, in the Republican’s weekly address, Wisconsin Senator Ron Johnson criticised what he described as a “do-nothing Senate” under Democratic majority leader Harry Reid.
Noting that the Senate hasn’t passed a budget in three years, Johnson said House Republicans had fulfilled their responsibilities by passing a budget and called on Senate Democrats to do likewise.