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In the wake of losses at J.P. Morgan Chase, the White House is seeking to ensure a tough interpretation of a regulation designed to prevent banks from making bets with their own money, according to people familiar with the matter.
White House officials have intensified their talks with the Treasury Department in the days since J.P. Morgan's losses came to light, these people say—representing the first tangible political impact from a trading mess that has cost one of the nation's most prominent banks more than $2 billion.
In this year's election, the president's advisers want to champion tougher Wall Street regulations passed in 2010, and worry the argument could be diminished if elements of the law—including the "Volcker rule" restricting speculative investments by banks—end up looking weak.
White House and Treasury officials are still determining whether the Volcker rule would have prevented the losses at J.P. Morgan, people familiar with the discussions said. Some of the president's political advisers are concerned that the J.P. Morgan trades, even if determined to violate the spirit of the rule, might slip through the regulatory net.
The Volcker rule is scheduled to take effect in July. Banks have two years to bring their activities into compliance.
In a sign of the political sensitivity of the issue, members of the president's National Economic Council and the Obama campaign's economic policy team discussed J.P. Morgan and the Volcker rule this week. NEC Director Gene Sperling has also called lawmakers in recent days to try to assuage concerns among Democrats that regulators could weaken the rule.
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