Group of professionals discuss finance

Breaking news and expert analysis on legal and compliance issues

[Back To Home][Back To Archives]

From Banking and Finance Law Daily, July 3, 2014

Obama agenda driven by Wall Street risks, middle-class issues

By Katalina M. Bianco, J.D.

President Obama in a July 2 interview on financial reform said that Wall Street continues to take “big risks,” and for his administration “that is an unfinished piece of business.” The president also said that addressing middle-class issues remains a strong part of his agenda.

Economic stability. Obama discussed the gains his administration has achieved in the goal of strengthening the economy but admitted that there remains a way to go in the drive toward financial stability. "Although the economy has been growing, wages and incomes continue to be relatively stagnant, and that's been a 20- to 30-year trend, and that involves some structural issues that we've really got to work on. But, having said all that, what is indisputable is that the economy is much better now than it was when I took office…and that does make a difference,” Obama said.

Obama said “it makes a difference” that:

  • 9.4 million jobs have been created;

  • manufacturing continues to strengthen for the first time since the 1990s;

  • the rising costs of healthcare have been slowed; and

  • the housing market has recovered so that many homeowners are getting their houses back above water.

However, the president stressed that despite these positive gains, “many Americans still feel like they haven't shared in those gains, particularly middle-class Americans.” He said that the “underlying trend for middle-class families” is that they do not “feel like no matter how hard they work, they're able to get ahead in the same way that their parents were able to get ahead—that's something that we continue to tackle and drives a lot of my agenda now."

Wall Street practices. Obama had some criticism for Wall Street, in particular—big banks. He denounced practices that he said “are aimed at generating revenue through “trading bets” instead of through investments that grow American businesses. Obama explained that for 60 years, “we've seen the financial sector grow massively” to the point where “a great strength of our economies that we've got the deepest, strongest capital markets in the world.” But, he said, as the “financial sector has grown, more and more of the revenue generated on Wall Street is based on arbitrage—trading bets—as opposed to investing in companies that actually make something and hire people.”

Obama said the he has discussed with his economic team how to “rebalance the economy sensibly” so that the U.S. banking system “is doing what it is supposed to be doing to grow the real economy, but not a situation in which we continue to see a lot of these banks take big risks because the profit incentive and the bonus incentive is there for them.” He noted that while this is “an unfinished piece of business,” it does not detract from the important economic stabilization functions designed by the Dodd-Frank Act.

Criticism of Republican majority. President Obama took aim at the Republican majority in the House for “pushing back against policies” that would “help the middle class, including immigration reform.” The president said the House Republicans currently have “ideological predispositions,” making them "captive of a small ideological band inside their caucus." He went on to say, however, that he didn’t believe this would be “a permanent state of affairs” and that given time, the Republicans will move back to the center “mainly because if they don’t, they’ll never win the presidency again” given that “at a certain point people are just going to get fed up.”

Meanwhile, Obama said, “what I have to make sure I'm doing is looking for every opportunity to go ahead and help the married couple that is struggling, working hard, paying their bills, but at the end of the month still don't have any savings and still don't feel like they're getting ahead.” At the same time, he stated that he intends to “continue to reach out to Republicans wherever and whenever they're willing.”:

MainStory: TopStory BankingOperations CommunityDevelopment DoddFrankAct FinancialStability

Banking and Finance Law Daily

Introducing Wolters Kluwer Banking and Finance Law Daily — a daily reporting service created by attorneys, for attorneys — providing same-day coverage of breaking news, court decisions, legislation, and regulatory activity.


A complete daily report of the news that affects your world

  • View full summaries of federal and state court decisions.
  • Access full text of legislative and regulatory developments.
  • Customize your daily email by topic and/or jurisdiction.
  • Search archives for stories of interest.

Not just news — the right news

  • Get expert analysis written by subject matter specialists—created by attorneys for attorneys.
  • Track law firms and organizations in the headlines with our new “Who’s in the News” feature.
  • Promote your firm with our new reprint policy.

24/7 access for a 24/7 world

  • Forward information with special copyright permissions, encouraging collaboration between counsel and colleagues.
  • Save time with mobile apps for your BlackBerry, iPhone, iPad, Android, or Kindle.
  • Access all links from any mobile device without being prompted for user name and password.