U.S. Treasury Secretary Jacob J. Lew said he is “stepping on the accelerator” to implement the Dodd-Frank Act and warned lawmakers against trying to change the financial rules overhaul.
“Members of Congress who want to alter financial reform before it is fully in place should carefully consider implementation efforts that are approaching completion,” Lew said in remarks prepared for the CNBC Institutional Investor Delivering Alpha Conference in New York today. “Major change is under way and will continue as the powerful tools created in Dodd-Frank are implemented fully.”
Some lawmakers in Washington are trying to push through their own modifications to the financial regulations. U.S. Senator Elizabeth Warren, a Massachusetts Democrat, John McCain, an Arizona Republican, and a bipartisan group of lawmakers have introduced a bill aimed at re-creating the Glass-Steagall Act, the Depression-era measure that separated commercial and investment banking. Another Senate proposal, sponsored by Ohio Democrat Sherrod Brown and Louisiana Republican David Vitter, would limit bank size without restoring to Glass-Steagall.
Lew’s address today focused on Dodd-Frank, which Congress debated in the aftermath of the 2008 financial crisis and President Barack Obama signed into law on July 21, 2010. The main elements of Dodd-Frank “will be substantially in place” by the end of this year, Lew said, adding that he has been “stepping on the accelerator” to implement it.
“We need to use all the tools in Dodd-Frank to make sure we’ve ended too-big-to-fail,” Lew said in a question-and-answer session after his prepared remarks. “If we get to the end of this year, and we cannot with an honest, straight face say that we have ended too-big-to-fail, we’re going to have to look at other options.” He didn’t elaborate on what alternatives the Obama administration might consider.
Lew declined to update comments he made in May that the federal government has room to operate under the debt limit until at least September. The Bipartisan Policy Center said in a posting on its website yesterday that the Treasury’s cash on hand will be exhausted between mid-October and mid-November.
Though U.S. regulators are coordinating the Dodd-Frank rules with foreign governments, Lew said in his prepared speech that “we will not let the pursuit of international consistency force us to lower our standards.”
He called the Volcker rule ban on proprietary trading “particularly important, and I will continue to push for swift completion of a rule that keeps faith with the intent of the statute and the president’s vision.” Regulators haven’t said when they will complete the rule, which is named for former Federal Reserve Chairman Paul Volcker.
Lew also warned Congress against depriving financial regulators of funds they need “to meet the significant new responsibilities with which we have charged them.” The cost of good regulation “is tiny compared to the enormous cost of failure,” he said.
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