(Adds details about regulations, background)
By Mark Felsenthal
WASHINGTON, July 3 President Barack Obama's
recent comments on the need for more bank regulation were
intended to underscore the need to keep close watch over market
risks rather than to signal a new policy initiative, a White
House spokesman said on Thursday.
"He wasn't referring to any specific regulation or law that
he had in mind but rather the need to continue to vigilantly
monitor financial markets to assess risks that may be emerging
and to ensure that the necessary regulatory protections are in
place," White House spokesman Josh Earnest told reporters at a
Obama's comments in a radio interview on Wednesday sparked
speculation that he may be considering new constraints on banks
and trading activity.
He made his remarks just a few weeks before the four-year
anniversary of the enactment of the Dodd-Frank Wall Street
reform law, which was passed in response to the 2007-2009
financial crisis and marked the biggest regulatory overhaul
since the Great Depression.
Four years later, U.S. regulators are still working to
implement the hundreds of new rules required by Dodd-Frank
Obama said on Wednesday that more work is needed beyond
those rules to address risks posed by traders who are able to
earn big bonuses, but still avoid taking a hit when bets go
However, the White House on Thursday played down the idea
that the president has additional steps in the works.
"He's not referring to some specific plan," Earnest said.
The president believes that regulatory protections need to
be able to keep up with a fast changing financial system and be
able to spot asset bubbles before they become a threat to the
stability of the system, Earnest told reporters.
The president will push at international summits such as the
G20 for rules to be applied evenly across global markets, the
"After all we can't just raise financial standards in this
market when you have such a globally interconnected financial
system," he said.
Despite the protections afforded by the Dodd-Frank law,
Obama believes that more can be done in certain areas, the
One such area is the so-called "shadow-banking system," a
reference to institutions that perform the same functions as
banks such as lending, but are not subject to the same
Another activity is high-frequency trading, and whether some
investors can manipulate the system to gain an unfair advantage,
The U.S. Securities and Exchange Commission has been
exploring for several years whether to adopt new rules to rein
in high-speed traders. The debate was reignited this spring when
bestselling author Michael Lewis published a book claiming the
market is rigged by high-speed traders who front-run investors.
SEC Chair Mary Jo White has said her agency is probing
potential misconduct in the high-speed trading area, and she
also recently announced plans to propose rules targeting
disruptive trading behavior.
(Additional reporting by Sarah N. Lynch; Editing by Eric Beech
and Chizu Nomiyama)