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Obama to take aim at excessive financial risk-taking
Source: Agencies |
January 21, 2010, Thursday
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US President Barack Obama, reeling from an election defeat in the US Senate, will propose stricter limits on financial risk-taking today, in a move that may help his administration tap into the public rage over excesses on Wall Street.
A senior administration official said yesterday that Obama would announce a series of measures to cut down on excessive risk-taking as part of a revamp of the country's financial regulatory system.
"The proposal will include size and complexity limits specifically on proprietary trading and the White House will work closely with the House and Senate to work this into legislation moving on (Capitol Hill)," the official said.
Proprietary trading refers to a firm making bets on financial markets with its own money, rather than executing a trade for a client.
The White House has blamed this for reckless gambling on the US property market which resulted in massive losses that almost destroyed the financial system in 2008, and forced taxpayers to provide a US$700 billion bank bailout.
Obama will speak at 11.40 am EST/1640 GMT following a meeting with Paul Volcker, the former Federal Reserve chairman who heads his economic recovery advisory board and who favors curbing big financial firms to limit their ability to do harm.
Obama separately told ABC News in an interview that the surprise defeat of his Democratic Party candidate in a crucial Massachusetts Senate race on Tuesday reflected anger over bankers' bailouts and double-digit unemployment.
Obama has already unveiled a plan to tax banks up to US$117 billion over the next 10 years to recoup money taxpayers lost in a bank bailout conceived by Obama's predecessor, former President George W. Bush, to stem the financial crisis.
Obama is picking on a popular enemy. Ordinary Americans, facing 10 percent unemployment as the economy recovers from the recession inflicted by the financial market collapse, have been enraged by reports of multimillion dollar banker bonuses.
In fact, Wall Street powerhouse Goldman Sachs is expected to report strong earnings on Thursday. Critics argue that such large profits -- and similarly large bonus payouts -- are only possible because of government support of financial institutions.
A senior administration official said yesterday that Obama would announce a series of measures to cut down on excessive risk-taking as part of a revamp of the country's financial regulatory system.
"The proposal will include size and complexity limits specifically on proprietary trading and the White House will work closely with the House and Senate to work this into legislation moving on (Capitol Hill)," the official said.
Proprietary trading refers to a firm making bets on financial markets with its own money, rather than executing a trade for a client.
The White House has blamed this for reckless gambling on the US property market which resulted in massive losses that almost destroyed the financial system in 2008, and forced taxpayers to provide a US$700 billion bank bailout.
Obama will speak at 11.40 am EST/1640 GMT following a meeting with Paul Volcker, the former Federal Reserve chairman who heads his economic recovery advisory board and who favors curbing big financial firms to limit their ability to do harm.
Obama separately told ABC News in an interview that the surprise defeat of his Democratic Party candidate in a crucial Massachusetts Senate race on Tuesday reflected anger over bankers' bailouts and double-digit unemployment.
Obama has already unveiled a plan to tax banks up to US$117 billion over the next 10 years to recoup money taxpayers lost in a bank bailout conceived by Obama's predecessor, former President George W. Bush, to stem the financial crisis.
Obama is picking on a popular enemy. Ordinary Americans, facing 10 percent unemployment as the economy recovers from the recession inflicted by the financial market collapse, have been enraged by reports of multimillion dollar banker bonuses.
In fact, Wall Street powerhouse Goldman Sachs is expected to report strong earnings on Thursday. Critics argue that such large profits -- and similarly large bonus payouts -- are only possible because of government support of financial institutions.
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