NEW YORK (Reuters) - U.S. Treasury Secretary Jack Lew said on Wednesday the “core elements” of the sweeping Dodd-Frank financial regulatory reform law will be enacted and in place by year’s end, roughly three years after the measure became law.
Lew told the CNBC Institutional Investor Delivering Alpha Conference it is particularly important for regulators to enact a version of the so-called Volcker Rule that seeks to limit risky trading by banks that is consistent “with the intent of the statute” and President Barack Obama’s vision.
The Volcker Rule is named for its architect, former Federal Reserve Chairman Paul Volcker.
Lew said that once regulators are done enacting the rules required by Dodd-Frank, they must remain vigilant because the “sources of risk change.” The legislation was enacted in response to the financial crisis that began in the summer of 2007.
“Now when we finish this work, our regulatory system will strike a balance between incentives for innovation and protections from excessive risk-taking,” Lew said.
Lew, who replaced Timothy Geithner at the Treasury in February, previously served as Director of the Office of Management and Budget in the Clinton and Obama administrations and later was White House chief of staff.
Lew also said the United States is committed to ending a policy of “too big to fail” where large institutions receive considerable government assistance if they get into trouble.
He added that the deadline for the U.S. debt limit is artificial and urged Congress to do its job and pay its bill. He also said that, at a time when the country is grappling with tax reform, such reform “would be a good thing.”
A former Citigroup executive, Lew drew heat during his confirmation hearing for the Treasury post for investing in a Citigroup venture capital fund registered in the Cayman Islands, home to many hedge funds.
Critics charged Lew should not have invested in a vehicle registered in a country known to be a popular tax haven for wealthy investors, but Lew said he wasn’t aware where the Citigroup fund was registered when he invested in it.
During his confirmation hearing, Lew said he sold his position in the venture capital fund at a loss and did not receive any tax benefit.
Reporting by Sam Forgione; Editing by Chizu Nomiyama and James Dalgleish