When the president feels the need to call out his own people for not moving fast enough on new rules for Wall Street, you know that things have really bogged down.
That's what Barack Obama did Monday, urging top financial regulators to get going on enforcing the Dodd-Frank law, passed by Congress three years ago but still adamantly opposed by big banks.
Wall Street's freewheeling ways and outright fraud worsened the worst financial crisis this nation has faced since the Great Depression. Nearly five years later, many large financial institutions are making big profits again, but relatively few wrongdoers have seen the inside of a prison cell.
Who gets the short end of the foot-dragging? The vast majority of Americans, of course, those who aren't favored clients of Wall Street firms. You can bet we're the ones who will be left holding the bag if there's another crash because proper safeguards aren't in place.
There is plenty of blame to go around.
Obama appointed too many people to key posts with close ties to the financial industry. While knowledge and experience are required, so is independence.
It took until 2011 for a new federal consumer watchdog agency — one of the key reforms — to get off the ground. Because of stonewalling by Republicans in Congress, Richard Cordray was not confirmed as its first director until last month.
The Securities and Exchange Commission has been too lenient. Saying it doesn't have the firepower to go up against wealthy Wall Street firms, it has settled too many cases for too little money and has allowed companies to avoid having to admit they did anything wrong. There is a glimmer of hope that the SEC will be taking a harder line under new Chairwoman Mary Jo White. The commission announced Monday that a major hedge-fund operator will admit guilt and also will be barred from the securities industry for at least five years, in addition to paying an $18 million settlement, for manipulating the market.
If any proof were needed that Wall Street needs more oversight, look no further than the nation's biggest bank, JPMorgan Chase. The SEC is investigating whether it violated bribery laws by hiring the children of top Chinese officials to win business in that country. Last week, prosecutors filed criminal charges against two former JPMorgan employees in the 2012 "London whale' trading scandal that involved $6.2 billion in losses. Last month, JPMorgan agreed to pay $410 million to settle allegations that it manipulated energy markets in California and the Midwest.
We'll see soon enough whether a bank is not only too big to fail but also too big to adequately regulate. Enforcing tougher rules would be a good start. The problem is not just that Wall Street crooks are going unpunished. The longer this goes on, the more Americans will believe the nation operates under a dual legal system: one set of rules for the wealthy and well-connected, and another set for the rest of us.
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