President proposes US banking restrictions
Source: Agencies |
January 22, 2010, Friday
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Print Edition
Print Edition
UNITED States President Barack Obama stepped up his campaign against Wall Street yesterday with a far-reaching proposal for tougher regulation of the biggest US banks.
"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."
It was a stern, populist lecture from the president to Wall Street for what he perceives as its abandonment of Main Street. Obama said the government should have the power to limit the size and complexity of large financial institutions as well as their ability to make high-risk trades.
He said it was not appropriate that banks have been able to run these trading operations with the protections afforded to regular banking services.
"We have to enact common sense reforms that will protect American taxpayers and the American economy from future crises," Obama said. "For, while the financial system is far stronger today than it was one year ago, it's still operating under the same rules that led to its near-collapse."
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 Republican President George W. Bush. Volcker and Donaldson have advocated stronger restrictions on banks.
Overhauling financial rules is the one issue on Obama's legislative agenda that appears still alive after Democrats' devastating loss on Tuesday in the Massachusetts Senate race. The White House is renewing Obama's demand for an independent consumer financial protection agency as part of any overhaul. That is one of the major sticking points in the Senate; the House of Representatives has passed its version already.
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 has branded bank executives as "fat cats" and proposed a fee on large banks to cover shortfalls in the government's US$700 billion financial rescue fund.
Expanding on earlier measures, Obama endorsed Volcker's proposal to restrict proprietary trading by commercial banks.
That would separate commercial banks from investment banks, a line blurred a decade ago by the repeal of the 1930s Depression-era Glass-Steagall Act.
This restriction would affect some of the biggest banks, including Bank of America Corp, Goldman Sachs and Citigroup Inc.
"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."
It was a stern, populist lecture from the president to Wall Street for what he perceives as its abandonment of Main Street. Obama said the government should have the power to limit the size and complexity of large financial institutions as well as their ability to make high-risk trades.
He said it was not appropriate that banks have been able to run these trading operations with the protections afforded to regular banking services.
"We have to enact common sense reforms that will protect American taxpayers and the American economy from future crises," Obama said. "For, while the financial system is far stronger today than it was one year ago, it's still operating under the same rules that led to its near-collapse."
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 Republican President George W. Bush. Volcker and Donaldson have advocated stronger restrictions on banks.
Overhauling financial rules is the one issue on Obama's legislative agenda that appears still alive after Democrats' devastating loss on Tuesday in the Massachusetts Senate race. The White House is renewing Obama's demand for an independent consumer financial protection agency as part of any overhaul. That is one of the major sticking points in the Senate; the House of Representatives has passed its version already.
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 has branded bank executives as "fat cats" and proposed a fee on large banks to cover shortfalls in the government's US$700 billion financial rescue fund.
Expanding on earlier measures, Obama endorsed Volcker's proposal to restrict proprietary trading by commercial banks.
That would separate commercial banks from investment banks, a line blurred a decade ago by the repeal of the 1930s Depression-era Glass-Steagall Act.
This restriction would affect some of the biggest banks, including Bank of America Corp, Goldman Sachs and Citigroup Inc.
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