WASHINGTON A top White House adviser said President Obama will not allow any further amendments to be made to the Dodd-Frank Act through spending packages, drawing a firm line in the sand after Congress passed a spending bill that repealed a key provision of the financial reform law.
Jeff Zients, director of the White House National Economic Council, told a Politico conference on Thursday that the spending bill was "a compromise, but better than the alternatives," such as a short-term continuing resolution or a government shutdown. The bill included a provision stripping out language in Dodd-Frank that requires big banks to push out certain parts of its swaps portfolio into an affiliate.
Zients said there were a number of items in the so-called "Cromnibus" spending package that the White House strongly disagreed with, including the provision cutting out the swaps push-out rule. When asked whether the White House would sign future spending bills that modify Dodd-Frank, Zients was unequivocal in saying the President would not accept further changes.
"The President will not allow for Dodd-Frank to be watered down," Zients said. "We are going to continue to push very hard on Dodd-Frank, continue implementation, and the president will not allow Dodd-Frank to be watered down."
Zients added that the President would use his veto power to block any future spending bill modifying Dodd-Frank.
Zients' comments come as many financial reform advocates fear that the repeal of the swaps push-out rule is the first step toward a wave of similar revisions that will chip away at Dodd-Frank in the next Congress. Democrats, led by Senator Elizabeth Warren, D-Mass., fought the swaps push-out provision in the Cromnibus on precisely those grounds.
A rule forbidding proprietary trading by banks, known as the Volcker rule, is high on the list of potential targets for Dodd-Frank revision. Banks are set to comply with the rule by July 21, and banks and their trade associations have been lobbying for a delay to the effective date or a broader revision.