CHICAGO-In the summer of 2010 President Obama heralded the passage by Congress of a sweeping Wall Street reform bill that he claimed would reshape the financial sector and prevent another economic crisis like the one that rocked the country in 2008, but many of those reforms-as evidenced by JP Morgan's recent $2 billion trading loss-have yet to take effect.
Under the new law, federal bank regulators were given time to write and implement the new rules, opening up a window for lobbyists to attack the reforms before they could even get off the ground. That is why the man who led the White House Council of Economic Advisers under President Obama believes the administration, regulators and Congress need to speed up the process-and the public needs to pay attention to the behind-the-scenes developments.
"We passed Wall Street reform, but a lot of Wall Street reform has yet to be enacted," Austan Goolsbee, now an economics professor at the University of Chicago and economic analyst for ABC News, said in an interview. "It's still in with the regulators and they're developing the rules and there's a big danger that if people stop paying attention the lobbyists are just going to chew up the rules and bend them to their liking. I think events like what happened with JP Morgan and some of the other events that are happening in the financial sphere are raising the importance of, 'We cannot put this out of our mind and just forget about it and say it's all taken care of, oh, we've passed regulatory reform,' because a lot of the most important decisions are still to be made."
"If we lose sight-the wider public-of what's going on in the back channels of these regulatory movements, I think that'd be a bad mistake," he said. "The fight's not over by a million miles. In many of these areas, the fight is just happening now. It's literally just beginning."
When asked who is to blame for the current situation, where a bank like JP Morgan can still lose a whopping $2 billion in a mere six weeks, Goolsbee pointed the finger partly at the Obama administration.
"The primary blame, obviously, goes to the people doing it, but it is worth putting some responsibility and putting some pressure on Congress and the administration and on the regulators-enact these laws, put them in place," he said. "This is precisely the kind of activity that something like the Volcker Rule was designed to prevent. So let's start putting these things in place and let's do it in a tough way to try to prevent this kind of thing from happening."
In his weekly address last week, Obama warned that opponents of the new reform measure have been hard at work trying to stop it, despite the 2008 crisis that sent the country reeling into recession.
"We've put in place Wall Street reform with smarter, tougher commonsense rules that serve one primary purpose: to prevent a crisis like that from ever happening again," the president said. "And yet for the past two years too many Republicans in Congress and an army of financial industry lobbyists have actually been waging an all-out battle to delay, defund and dismantle Wall Street reform."
One of those opponents of the reform bill is presumptive GOP presidential nominee Mitt Romney, who believes the bill imposes excessive regulations. Earlier this week Romney reiterated his pledge that, if elected, he will reduce the nation's unemployment rate - currently at 8.1 percent - down to 6 percent during his first term in office. Goolsbee said that the reduction in the jobless rate over the past two years have not been as fast as it needs to be.
"The economy's been adding over the last two years about 4 million jobs, which is a pretty good pace. It's not a good enough pace," Goolsbee said. "We're coming out of the deepest downturn of our lifetimes. I hope that we get the unemployment rate down to 6 percent in rapid order. I mean, I fear from the slog that we and every other advanced country in the world has had over the last three years that it's going to take some time for any of us to do that."
According to a new ABC News/Washington Post poll released this week, Americans are nearly twice as likely to say that they are worse off than better off under Obama's presidency. Only 16 percent of Americans say their financial situation has improved since Obama entered the Oval Office, while 30 percent say they are worse off today.
"The economy's been growing, we've been adding jobs, but it hasn't been doing it at a very impressive rate. It's been at a modest rate," Goolsbee said. "Compared with Europe, compared with other advanced countries in Asia, the US has done fairly well but it has been no great shakes and a lot of that the economics profession views comes from it being a financial-crisis-created recession and from the fact that we can't go back to doing what we were doing before the recession began because that was rooted in a bubble.
"Now that takes a long time. I think you can see that in the dissatisfaction of some people in the polling that they would like it to be getting better faster. On the other side you've got people saying there wasn't a depression and that's a significant achievement when you look at what happened in a lot of other advanced economies. It definitely could be a lot worse."
Matthew Jaffe is covering the 2012 campaign for ABC News and Univision.