Obama committed to financial reform, says Treasury Secretary Lew
President won’t allow more changes, he says
The Obama administration remains committed to the financial reforms passed since the 2008 economic crisis, despite allowing changes last month that watered down the Dodd-Frank law aimed at reining in Wall Street’s riskiest practices, Treasury Secretary Jacob J. Lew said Thursday.
Lew, in an interview with Globe, said Obama signed a spending bill that included provisions loosening restrictions on the kind of risky trading that contributed to the financial crisis because he didn’t want to shut down the government. He noted that Obama pledged to veto any attempts by the Republican Congress to further weaken core elements of the financial law in his State of the Union address earlier this week.
“It was, on the whole, more important to get the funding bill and get the funding for very important priorities that were in the funding bill and to have stability for the economy than to get into the kind of divisive process that would have come from a veto,” Lew said.
Lew was in Boston to kick off the tax season and visit Action for Boston Community Development Inc., a nonprofit social services agency that helps low-income residents prepare their tax returns at no cost.
His visit was made in part to call attention to new requirements for 2014 tax returns related to the Affordable Care Act, the federal law also known as Obamacare.
Taxpayers will have to report whether they had medical insurance coverage. Those who received coverage through the health insurance exchanges created by the law and those who didn’t obtain coverage will have to answer additional questions and provide additional income documents.
After talking to tax preparers across the country, Lew said he doesn’t expect the health care law to cause problems. “I’m getting the sense that things are getting off to a good start,” he said.
The start with the new Republican-controlled Congress may not be going quite as well. The president remains at odds over issues such as immigration, raising the minimum wage, and the future of the financial reform.
Congressional Republicans have made it clear that they want to roll back the Dodd-Frank law, named for its sponsors, former Connecticut senator Chris Dodd and former Massachusetts representative Barney Frank.
The law, passed after the financial system’s near-collapse, resulted in tougher regulations on banks and financial institutions and created the Consumer Financial Protection Bureau, which has taken on everything from college debt to debit card fees.
Republicans have argued that regulations are too strict, adding costs and making it hard for banks to do business, which hurts the economy. But Lew said Republicans are ignoring recent history and lessons from Wall Street’s meltdown.
“Just because the economy is doing better now we can’t forget where we were, and we can’t go back,” he said.
Obama’s enthusiasm for financial reform, however, was called into question by some Democrats, including Massachusetts Senator Elizabeth Warren, when he signed the spending bill that weakened Dodd-Frank.
Warren was more recently able to scuttle the nomination of a Treasury undersecretary who had strong ties to Wall Street.
In a statement after the State of the Union address, Warren voiced support for Obama’s message that “the White House will push back hard against efforts to roll back critical Wall Street reforms.”