If Congress fails to revamp the financial regulatory system, it runs the risk that the kind of crisis that occurred a year ago will happen again, according an official who speaks for President Obama.
White House Press Secretary Robert Gibbs talked about financial regulatory reform Thursday, during a regular press briefing.
Neil Barofsky, the inspector general for the Troubled Asset Relief Program, suggested earlier this week that the financial system could be in even more trouble than it was in mid-2008, because the crisis forced some struggling financial services companies to merge.
Some companies are now even more “too big to fail” than they were before the crisis started, and the government may have increased the temptation to take excessive risk, by showing executives of the financial giants that the government will bail their companies out, Barofsky said.
“Does the administration share Mr. Barofsky’s view?” a reporter asked.
Gibbs started by talking about the Obama administration’s requests for broader authority.
Federal regulators need the authority “to break up bigger entities and close down parts of them and deal with the problems that exist,” Gibbs said. “We certainly have sought that in regulatory reform to address this concept of too big to fail and, again, want to make progress on those issues during this Congress.”
When pressed about whether the financial system is now more vulnerable than it was in mid-2008, Gibbs said, “I don’t agree with that. I think we are in a different position than we were September 14th or September 15th of last year.”