Pew Hosts Treasury Secretary Lew for Financial Reform Discussion
December 5, 2013
The Pew Charitable Trusts
901 E Street,
Washington, D.C. 20004
In a broad policy address at The Pew Charitable Trusts on Thursday, Dec. 5, U.S. Treasury Secretary Jacob J. Lew outlined new financial protections put in place in the wake of the 2008 Great Recession and described what still must be done to protect the nation’s economy.
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“Dodd-Frank ended ‘too big to fail’ as a matter of law; tough rules are now in place to make sure banks have the capital to absorb their own losses; monitoring through stress test is underway; and resolution authorities and plans are in place,” Secretary Lew told a gathering of financial experts and journalists at Pew’s Washington, DC headquarters. “There is a growing recognition of these changes, and market analysts are now factoring them into their assumptions.
“Put simply, the reforms we are putting in place raise the cost for a bank to be large, requiring firms to internalize their risks, and together, with resolution authority and living wills, make clear that shareholders, creditors, and executives—not taxpayers—will be responsible if a large financial institution fails.”
Secretary Lew, who was introduced by Pew Senior Advisor Sheila Bair, a former chairman of the Federal Deposit Insurance Corporation, said that while there had been progress in financial reform, important steps remained. He addressed four main areas: the “rules of the road” for modern financial markets; sufficient resources for regulators “to get the job done;” ensuring the standardization of rules with other nations to address international risks; and remaining “vigilant to potential new threats” steming from “both traditional banking and the shadow banking system.”
“Failing to fund supervision and enforcement of the new rules amounts to virtual deregulation. And it puts Americans at risk that financial threats will go unchecked,” Secretary Lew warned.
“Even in tight budgetary times, this is not a budget-driven choice, and we must provide regulators with sufficient resources to make the financial regulatory system work and protect working families from financial harm. How could any of us say to someone who lost their job, home, or retirement security because of lax oversight that a safe financial system was a luxury we could not afford? We saw what that wrought in 2008—and it cost Americans trillions of dollars and untold human misery. We cannot let that happen again.”
More about Treasury Secretary Jacob J. Lew
Jack Lew was confirmed by the United States Senate on February 27, 2013, to serve as the 76th Secretary of the Treasury. Secretary Lew previously served as White House Chief of Staff. Prior to that role, Lew was the Director of the Office of Management and Budget (OMB), a position he also held in President Clinton's Cabinet from 1998 to 2001. Before returning to OMB in 2010, Lew first joined the Obama Administration as Deputy Secretary of State for Management and Resources.
Before joining the State Department, Lew served as managing director and chief operating officer for two different Citigroup business units. Prior to that, he was executive vice president and chief operating officer of New York University, where he was responsible for budget, finance, and operations, and served as a professor of public administration. From 2004 through2008, Lew served on the Board of Directors of the Corporation for National and Community Service and chaired its Management, Administration, and Governance Committee. Read more
More about Sheila Bair
Sheila C. Bair served as the 19th Chairman of the Federal Deposit Insurance Corporation for a five-year term, from June 2006 through June 2011.
Chairman Bair has an extensive background in banking and finance in a career that has taken her from Capitol Hill, to academia, to the highest levels of government. Before joining the FDIC in 2006, she was the Dean's Professor of Financial Regulatory Policy for the Isenberg School of Management at the University of Massachusetts-Amherst since 2002. Read more
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Listen to Lew's remarks on financial reform