White House Press Secretary Earnest Praises Wall Street Reforms
Commentary by Steven Lofchie
In a press briefing, White House Press Secretary Josh Earnest praised the Wall Street reforms that have taken place during President Obama's tenure.
"One of the key legacy achievements of this presidency will be the important reforms of Wall Street," Press Secretary Earnest remarked. "Those reforms have led to a financial system that is more stable and ensures that taxpayers are not on the hook for bailing out the financial institutions that make risky bets."
He added that President Obama takes pride in knowing he was able to keep the promise he made at the beginning of his term: to "impose greater regulations on Wall Street to make the system more stable, while at the same time not shutting down the dynamism of the U.S. economy."
He emphasized that the "significant growth" of stock market trends over the last seven years was "just one piece of evidence" that White House reforms have made the financial system safer and more stable.
Commentary
It is true that many rules have been adopted and that, if Dodd-Frank is implemented fully, even more will be adopted. It is far less clear that the financial system is better or more stable. Many of the new requirements are irrelevant to financial stability (e.g., the requirement that certain swaps be traded on an exchange), while the effect of other rules that are touted by the regulators as promoting financial stability (e.g., the requirement that certain swaps be centrally cleared) seem either financially inconsequential (so what if interest rate swaps are centrally cleared?) or potentially destabilizing (clearing corporations are obviously too big to fail and will need to be bailed out if they do). Further, there is no "evidence" from stock market trends that shows the economy is safer. Is it not possible that stock prices are high largely because interest rates are dangerously low? If the government gives itself an A for pronouncing the achievement of financial stability, then the Cabinet should get an A-plus for asking these questions.