Lew: `Our Banks Are Better Capitalized’

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Sept. 24 (Bloomberg) -- U.S. Treasury Secretary Jacob J. Lew discusses the financial sector and the biggest banks having 30% more assets than 5 years ago. He speaks with Al Hunt on Bloomberg Television’s “Street Smart.” (Source: Bloomberg)

Credit with the fifth anniversary of the fiscal crisis, helping rescue the economy from the abyss.

I think these figures are correct.

The biggest banks have 30% more assets than they did back then.

The five largest control more than half of all banking assets.

You said earlier that if too big to fail isn't clearly resolve by the end of the year, we will have to look at other approaches.

These banks remain too big to fail.

What are you going to do about it?

If you look at what we have accomplished so far, we have already accomplished a great deal.

We still have more to do.

Our banks are better capitalize.

They have twice as much capital.

We have resolution authorities in place which provide a way, if the banks hit a hard spell and they cannot stay solvent, for it to be resolved without the taxpayers stepping in.

We have rules in place that have taken the worst mortgage practices and made them unacceptable.

They cannot be anymore.

There are number of aspects that are approaching completion where i believe we will have things in place including the volcker rule which would stop or proprietary trading.

If you look overall at what has happened including the implementation of the basel rules, it is putting a price on being large.

There are surcharges on large institutions.

Have done a lot.

At the end of the year we have to ask, have we done enough?

In the five-year anniversary, there has been a lot of interesting commentary about this.

It is not as simple as is it the same as it was four years ago or not.

We have done an enormous amount.

We haven't quite finished.

I have put a huge amount of effort in my first six months as treasury secretary into pulling other regulators together, saying we have to finish it this year.

I'm not going to prejudge.

When you talk about size, some of these failing institutions had to be absorbed.

Some of it is a byproduct of the financial crisis itself.

You mentioned the volcker rule.

Dodd-frank was passed over three years ago.

Putting a price on being large.

Three years later, that seems interminable.

I have been working on this full-time for the last half year.

I have watched it from positions of interest for a couple of years before that.

Three years ago, it was a different situation than it is now.

You had many people calling for the repeal of dodd-frank, not unlike the fight over the affordable care act that we are seeing now.

The financial community, instead of saying let's get this finished, engaged in delaying things.

That got clarified in the last half of the year.

Elections do matter in this country.

There was a realization that dodd-frank was not going away, giving us a change of attitude outside of the regulatory agencies that it makes a difference.

We are pushing to get it finished by the end of the year.

Do you agree with chairman volcker, who said not long ago that he really thinks there are too many regulators right now, too much overlap, and that that plays to the interest of lobbyists.

The question is the calm pill -- i'm located regulatory system we have.

I'm not sure anyone given a whiteboard would create the tax system that has evolved over a hundred years, with multiple committees of congress and multiple different entities coming out of it.

When dodd-frank was written, people came to the realization that it was not going to happen, to simplify the structure much more, in part because all the institutions were built around the structure as exist today.

The challenge is how to make it work.

Dodd-frank created a group called the financial stability oversight council.

I chair that as treasury secretary.

I have been using it aggressively to drive these issues to closure.

It may not be as easy as dealing with one or two regulators, but we have a system with multiple regulators for both banks and capital markets.

It would take a change of law, and i don't think that is going to happen anytime soon.

So we are going to make the system work to produce the best outcome we can.

I have been getting good cooperation from the regulators.

They want to succeed.

They want to be in a place at the end of the year where they can say we made the system as safe as it can be made.

There is always going to be some risk in the financial system.

The key question is not whether banks will have bad times.

The question is, does the taxpayer gets stuck with it and does the economy pay the price?

When people read about things like jpmorgan, they say did anybody blow the whistle?

I think the regulators are focused on it.

There are a lot of things that are changing now because of the things that have been done.

This was the most are mad etc.

Changes -- the most dramatic set of changes in 75 years.

There is a whole different level of visibility and what they are doing and the ability to see problems when they are developing.

Shadow banking is something that dodd-frank did not actually addressed directly.

The regulators are working on that, to say this may be one of the problems of the future.

We have to be sure we don't just deal with things in the four corners of dodd-frank, but we need broad authorities to take a look at what may happen in the future.

There was not enough forward- looking, how has the system change, what tools do we need.

We have to stay on it.

It is not like they are finished on december 31. your department is involved

This text has been automatically generated. It may not be 100% accurate.


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