“Part of the challenge is people want things that are simple, but it’s not a simple thing to say to – try to draw those lines between market-making and other forms of trading,” Geithner said, according to Bloomberg. “There’s absolutely some work to do on this.”
When asked about progress being made in drafting the Volcker Rule, a provision of Dodd-Frank that prohibits proprietary trading by banks, Geithner said that there was still much work to be done on the measure.
“Once concern is that exceptions will swallow the rule,” Geithner said, according to the Wall Street Journal. “Another concern is that exceptions in the law to protect market-making and hedging are too narrow and would therefore get in the way of activities important for markets to function [and] maybe make the cost of credit higher. It’s not a simple thing to say to try and draw those lines between market-making and trading.”
Geithner also said that poor regulation and a lack of regulation in the financial industry led to America’s current economic crisis and that the importance of financial reform cannot be understated.
“We’ve got an economy that’s gradually getting stronger, and the strength is very broad-based,” Geithner said, the Wall Street Journal reports. “One of the biggest risks we face still is that politics get in the way of sensible, pragmatic changes to the economy.”