Tighter regulations for financial institutions appear to be exposing a difference of opinion in the Obama administration. The president wants to protect taxpayers from high-risk hedge funds that a few large banks operate.
"We should no longer allow banks to stray too far from their central mission of serving their customers," Obama said.
The president's comments gave chills to Wall Street investors, who drove the Dow down over 200 points Thursday.
There is a differing view among some Treasury Department officials that tighter regulations could hurt large banks competing globally.
Peninsula Congresswoman Jackie Speier, who sits on the House Financial Services subcommittee, thinks change is needed.
"The fact that we still don't have these banks lending, the fact that they're still engaging in their risky behavior and really being rewarded handsomely for it is really just astonishing to me," she said.
The chief investment officer of Los Angeles-based City National Bank said more regulation appears certain for the biggest banks.
"We're moving in that direction in many cases appropriately so," Richard Weiss said. "However, we still need to allow banks, commercial banks like City National, to operate freely in many regards to make the loans that are so necessary to get the local economies going. That's what we're looking to do."
The call for tighter regulation comes at a time when the administration needs banks' help to loan money to small businesses to create jobs.
The president appears to be seeking swift and decisive changes at the same time that Congress has been moving much slower on reforms. The House subcommittee is holding a hearing Friday looking at compensation of top bank executives.
