Press Secretary Robert Gibbs on Thursday said the White House does not share the view that the nation's banking system is in a worse position that it was a year ago -- a dire assessment voiced a day earlier by the man in charge of monitoring the administration's bank bailout program.
The banking system is now "in a different position," Gibbs said, adding: "I don't doubt that we have steps that needs to be taken and I don't doubt that without new rules for the road there is the potential to go back to what we had and forget what we went through in the financial system."
Neil Barofsky, the special inspector general managing the Troubled Asset Relief Program, warned Wednesday that the government's bailout of the banks had actually put the system in worse position, because the Obama White House and Democratic-led Congress had done nothing to tackle the issue of banks becoming "too-big-to-fail,"
"These banks that were too big to fail are now bigger," Barofsky told CNN. "Government has sponsored and supported several mergers that made them larger and that guarantee, that implicit guarantee of moral hazard, the idea that the government is not going to let these banks fail, which was implicit a year ago, is now explicit, we've said it. So if anything, not only have there not been any meaningful regulatory reform to make it less likely, in a lot of ways, the government has made such problems more likely.
"Potentially we could be in more danger now than we were a year ago," he added.
"I don't agree," said Gibbs on Thursday. And he stressed that the White House is committed to getting the issue of too-big-to-fail under control as part of a broader approach to regulatory reform.
"I think part of regulatory reform is addressing this notion of too big to fail by giving the authority that doesn't currently exist -- as it does in place like the FDIC --to break up bigger entities and close down parts of them and deal with the problems that exist. We have certainly sought that in regulatory reform to address this concept of too big to fail and again we want to make progress on those issues."
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