WASHINGTON - A year after prodding financial regulators to act more swiftly to rein in Wall Street, President Barack Obama on Monday claimed progress in toughening banking rules but urged bank overseers to consider additional ways to prevent the kind of risk-taking that precipitated the 2008 financial crisis.
Obama met Monday with top financial regulators at the White House, including Federal Reserve Chair Janet Yellen, to discuss the pace of implementing the 4-year-old regulatory overhaul that Obama signed into law in 2010.
A year ago, with regulations behind schedule and major pieces of the law not yet in place, Obama urged regulators to be more urgent in adopting new rules. At the time, regulators had completed rules on only 40 percent of the nearly 400 regulations 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 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, that rule won't take effect for the biggest banks until mid 2015.
Regulators continue to work on additional requirements that would address executive pay and set standards for the amount of money and assets banks would have to hold to avoid becoming overextended.
"The president acknowledged the collaborative work of the regulators, specifically recognizing their work in finalizing the Volcker Rule, and also urged participants to consider additional ways to prevent excessive risk-taking across the financial system, including as they continue to work on compensation rules and capital standards," White House spokesman Josh Earnest said.
Yellen has signaled an aggressive stance by the Fed toward regulation of big banks, suggesting 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, and private equity and hedge funds.