WASHINGTON (Reuters) - The White House, following a trading loss of more than $2 billion by JPMorgan, wants to ensure a tough interpretation of a regulation aimed at preventing banks from making bets with their own money, The Wall Street Journal reported on Wednesday.
Citing people familiar with the matter, the report said White House officials have stepped up talks with the Treasury Department in the several days since the staggering loss was disclosed by the bank.
The discussions, according to the report, represent the first tangible political impact from the trading debacle.
Obama said this week the huge loss illustrated the need for Wall Street reform and warned that the same kind of error at a less stable bank may have required government intervention.
The issue was one of Obama’s signature domestic policy achievements, but he has faced opposition in trying to implement and enforce it.
Treasury Secretary Timothy Geithner said on Tuesday the rules required by the 2010 Dodd-Frank financial oversight law would strengthen the ability of banks to absorb losses like those disclosed by JPMorgan last week.
A key provision of the law, the Volcker rule, bans banks from making speculative bets with firm money, but includes an exemption for trades done to hedge risk.
“It is because of the president that the Volcker rule is a part of the law, and our administration has worked since the day it passed to ensure it and the entire law is implemented in a tough and effective way so that taxpayers never again have to bear the burden of risky behavior on Wall Street,” White House spokeswoman Amy Brundage said when asked about the Journal report.
Regulators are crafting the final language of that rule.
Reporting by John Crawley and Caren Bohan; Editing by Lisa Shumaker