WASHINGTON Oct 25 President Barack Obama said
in an interview released on Thursday that the next important
step for making the U.S. financial sector safer is to make sure
executive pay is less closely tied to risky bets.
In an interview to be published on Friday in Rolling Stone
magazine, Obama said that despite passage of Dodd-Frank
financial reform legislation, there is more to be done to make
financial markets safe after the damage caused by the crisis of
"The single biggest thing that I would like to see is
changing incentives on Wall Street and how people get
compensated," Obama said. It's questionable, even after
enactment of Dodd-Frank reforms, that those incentives have
completely been changed, he added.
The Rolling Stone interview stirred controversy because of
the president's use, at one point, of a barnyard epithet that
some saw as an attack on Republican Mitt Romney.
The White House did not dispute the remarks but a
re-election campaign official stressed that the comments were
"part of a casual conversation at the end of the interview." The
wide-ranging interview covers Obama's first term, what he views
as his biggest accomplishments and his fierce fight with Romney
for the White House.
The president and Romney are running neck and neck ahead of
the Nov. 6 election and have stepped up their campaigning. Obama
points to financial reform as a signature accomplishment of his
four years in office and says the overhaul will prevent a repeat
of the devastating crisis that caused the loss of more than 8
million jobs and erased an estimated $19 trillion in household
However Dodd-Frank reforms are deeply unpopular with the
financial industry and many businesses, who say an avalanche of
new requirements stands in the way of hiring new workers and
making fresh investments, thus holding back the broader economic
recovery. Romney has promised to repeal provisions of the 2010
Dodd-Frank law if elected.
Obama said the stability of markets is still at risk because
people making risky bets are handsomely rewarded if the bets pay
off, but face limited consequences if those bets go sour.
"It tilts the whole system in favor of very risky behavior,"
he said. "By the time the chickens come home to roost, they're
still way ahead of the game."
Such changes are not entirely up to passing laws in
Washington and may require shareholders or company directors to
act, Obama said. Changes to the executive compensation system
cannot entirely be legislated, he said.
Another challenge to ensuring greater financial stability in
the future will be to ensure that the rules that prohibit banks
that receive government backstop from making risky trades -- the
so called Volcker Rule - is adequately enforced, Obama said.
Progress in implementing the rule was slowed when regulators
received thousands of comment letters.
Two influential U.S. senators on Thursday urged regulators
to resolve differences and finish writing the rules before the
end of the year.