Obama: We're not done with banking reforms

President Obama speaks on the economy at the Lake Harriet Band Shell in Minneapolis, Minnesota on June 27, 2014.


Last Updated Jul 3, 2014 2:30 PM EDT

President Obama says that nearly four years after Congress toughened bank regulations the financial sector is still in need of more rules. He says bank customers need to be better protected against failed risk-taking.

Mr. Obama says the changes he pushed for and signed into law in 2010 protect taxpayers from having to bail out failed banks. But he says bank traders can still make huge bonuses on high risk trades. If the bets go bad, he says, quote "everybody else is left holding the bag."

In response to a question whether "we would be better off if banking was boring again," Mr. Obama said, "Absolutely."

"Some of the work to get that done, though, involves restructuring the banks themselves -- how they work internally," he pointed out explaining, "if you are in one of the big banks, the profit center is the trading desk, and you can generate a huge amount of bonuses by making some big bets; you will be rewarded on the upside. If you make a really bad bet, a lot of times you've already banked all your bonuses. You might end up leaving the shop, but in the meantime everybody else is left holding the bag."

The president said that while the 2010 law cleaned up some of the banking issues that eventually protected taxpayers, "it's still not a real efficient way for us to run a financial system. That's going to require some further reforms. That's going to require us looking at additional steps that we can take."

Mr. Obama made his remarks in an interview with NPR's "Marketplace" program airing Thursday.

Mr. Obama does not specify what changes he would recommend. Recently he has met with groups of economists, including Stanford's Anat Admati, who has called for banning large banks from making payouts to shareholders until they can better deal with any losses.

Thursday, White House spokesman Josh Earnest clarified the president's comments saying, "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, again, to ensure the stability of the financial markets."