Obama proposes new limits on banks
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U.S. President Barack Obama announced on Thursday a plan to limit the size and scope of large banks, marking the administration's latest policy on financial regulation.
The announcement indicates the U.S. government's effort to curb giant financial institutions' risk-taking activities in a public mood of fury at massive Wall Street bonuses and tight credit markets.
"While the financial system is far stronger today than it was one year ago, it is still operating under the exact same rules that led to its near collapse," Obama said.
"My resolve to reform the system is only strengthened when I see a return to old practices at some of the very firms fighting reform," Obama said.
"When I see record profits at some of the very firms claiming that they cannot lend more to small business, cannot keep credit card rates low, and cannot refund taxpayers for the bailout," Obama said, "It is exactly this kind of irresponsibility that makes clear reform is necessary."
The White House said that the President's proposal would strengthen the comprehensive financial reform package that is already moving through Congress.
The proposal would restrict banks' ability on two fronts. Firstly, it aims at ensuring that no bank or financial institution that contains a bank will own, invest in or sponsor a hedge fund or a private equity fund, or proprietary trading operations unrelated to serving customers for its own profit.
Secondly, the proposal will place broader limits on the excessive growth of the market share of liabilities at the largest financial firms, to supplement existing caps on the market share of deposits.
"We have to enact common-sense reforms that will protect American taxpayers and the American economy from future crises,'' Obama said.
Joining Obama for the announcement were former Federal Reserve Chairman Paul Volcker, who heads the president's Economic Recovery Advisory Board, and William Donaldson, chairman of the Securities and Exchange Commission under President George W. Bush. Volcker and Donaldson have advocated stronger restrictions on banks.
The new proposal from Obama intends to limit speculation by commercial banks and to keep financial institutions from growing so big that they pose a risk to the economic system.
Obama expressed tough rhetoric about Wall Street lobbyists opposing the financial reform.
There is "an army of industry lobbyists from Wall Street descending on Capitol Hill to try block basic and common-sense rules of the road that would protect our economy and the American people," Obama said.
"We have to get this done,'' Obama said at the White House. "If these folks want a fight, it's a fight I'm ready to have."
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