Obama’s comments could indicate he's ready join the populist debate. Obama: More Wall St. reform needed

President Barack Obama on Wednesday said that “further reforms” of Wall Street are needed, arguing that there remains too much focus on making profits through big banks’ trading desks as opposed to investing in companies and the “real” economy.

Obama said in an interview with the Marketplace radio show that the 2010 Dodd-Frank law put in place important policies to safeguard against another financial crisis but that more can be done, without offering any specific proposals.


“Right now, 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,” he said in the interview, a transcript of which was published on the program’s website. “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. Now what we’ve been able to do is to try to prevent taxpayers from being the folks who are left holding the bag. But 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.”

( Also on POLITICO: Reforming the VA one step at a time)

The president’s comments are significant because since the enactment of Dodd-Frank, Obama administration officials have mostly preached patience while the law is being implemented to those calling for more to be done to crack down on big banks.

In the interview, Obama described the law as intended “to prevent another catastrophic financial crisis. It wasn’t expected that it was going to solve all the problems.”

Much of the oversight of Wall Street and the financial sector is in the hands of independent regulatory agencies, such as the Federal Reserve and the Securities and Exchange Commission, so the president would have difficulty using his executive authority to put in place any big changes and a divided Congress is unlikely to pass related legislation anytime soon.

( Also on POLITICO: Poll: Obama worst prez since WWII)

But the president’s comments could indicate the administration is ready join the increasingly populist debate on whether enough has been to done to rein in Wall Street in the aftermath of the 2008 financial crisis — an issue that has animated both liberals and conservatives.

“What I’ve said to my economic team is that we have to continue to see how can we rebalance the economy sensibly so that we have a banking system that is doing what it is supposed to be doing to grow the real economy, but not a situation in which we continue to see a lot of these banks take big risks because the profit incentive and the bonus incentive is there for them,” he said in the interview. “That is an unfinished piece of business, but that doesn’t detract from the important stabilization functions that Dodd-Frank were designed to address.”