Lew: Administration Opposed to Any Corrections that Undermine Financial Reform

Speaking at SIFMA’s Annual Meeting, Treasury Secretary Jacob Lew showed the administration’s openness to technical corrections to Dodd-Frank financial regulations, but cautioned against overhauling reforms completely.

“I hope we get to a point in the political debate where there’s a real difference between technical corrections of a lot of things and the kind of pitched battle that really is about repealing and reversing direction,” Lew said at the 2015 SIFMA annual meeting. “I think we are completing the implementation of Dodd-Frank. We’ve said we’re open to discussions about things that are truly technical, but we’re very much opposed to anything that would undermine the important architecture of financial reform.”

Lew stressed the importance of financial reforms made following the damage of the financial crisis to the U.S. economy. “I have worked on regulatory issues from a number of different perspectives and I very much believe that when you look at regulation, you have to look at the costs and the benefits. And I think that the benefits of financial reforms are just enormous,” he said.

“We put in place a system of financial reforms to give us the ability to see what’s going on in the system, have regulators take action and respond to it, and make sure that institutions have the capacity to bear the risks of their own actions and if need be, be resolved,” he explained. “That is an important piece of work.”

SIFMA Chair John Rogers raised a concern that, while the financial industry has no intention of trying to repeal Dodd-Frank, there has been no real review of any unintended consequences. “Isn’t it time, particularly five years after, to take a pause and look?” he asked.

Although Lew indicated that discussions on technical issues are possible, he argued that any large-scale pushback to financial reforms would be too damaging.

In addition to the completion of Dodd-Frank implementation, Lew laid out other U.S. administration priorities and expectations for the economy, including the Trans-Pacific Partnership, IMF ratification and financial inclusion. He also noted that the U.S. needs to invest in more infrastructure for “a stronger U.S. economy” in both the short- and long-term.

Lew highlighted the current strength of the U.S. economy, which can be seen in jobs numbers as well as consumer confidence and consumer activity.

“We’re in a place where the world wants to know – What is the secret to our resilience? How do we bounce back when others have a harder time bouncing back?” he said. “I think that’s part of the greatness of the United States – the resilience of the American people and our capacity to look ahead and build our future.” Lew added that the bipartisan two-year budget deal passed in late October, which averted the debt limit crisis, was “a very good thing.”

“I think if you look at the core U.S. economy, I think it’s in a strong growth place,” Lew noted. “Obviously, now we have some international headwinds without which we would be doing better.” In that regard, Lew said that the U.S. has consistently advised its trading partners and fellow nations to employ all of the fiscal and monetary tools and levers available to them. “No single tool alone will be as effective as the right balance together,” he said.

Ira Hammerman

Executive Vice President and General Counsel

SIFMA