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First Massachusetts, and now this garbage:
[h1]Obama hammers Wall Street banks[/h1]
By Tom Braithwaite in Washington and Francesco Guerrera in New York
Published: January 21 2010 16:42 | Last updated: January 21 2010 21:50
The global banking industry was thrown into turmoil on Thursday after President Barack Obama moved to channel public rage over the financial crisis into the most far-reaching overhaul of Wall Street since the 1930s.
In reforms that could force the restructuring of some of the biggest names in US banking - including JPMorgan Chase and Goldman Sachs - Mr Obama promised that "never again will the American taxpayer be held hostage by a bank that is too big to fail".
Flanked by his top economic advisers at the White House, Mr Obama called for banks to be banned from trading on their own account and "owning, investing in or sponsoring" hedge funds and private equity groups.
The measures hark back to the response to the 1929 stock market crash, which prompted the US government to separate investment and commercial banking under the Glass-Steagall Act, which remained in law until 1999.
The shares of the big Wall Street banks fell as Mr Obama announced the proposals, although those of regional American banks rose. It was unclear how far foreign banks operating in the US would be affected by the proposed changes.
Under the Obama plan, new rules - beyond current regulations restricting banks from holding no more than 10 per cent of US deposits - would prevent banks that raise money in the markets from growing so big as to pose a systemic risk.
"In recent years, too many financial firms have put taxpayer money at risk by operating hedge funds and private equity funds and making riskier investments to reap a quick reward," said Mr Obama. "And these firms have taken these risks while benefiting from special financial privileges that are reserved only for banks."
The White House was accused of adopting a populist message to divert attention from the blow delivered by the Democrats' defeat in the Senate race in Massachusetts. But Mr Obama underlined his determination to see change, saying "it is a fight I am willing to have".
Republicans responded coolly but did not reject the proposals. Judd Gregg, a Republican on the Senate banking committee, told the Financial Times he was "willing to look at the issue".
"I'm a little concerned that this, however, is less about financial reform and more about the politics of the day and an attempt to get a populist message going and use the banks as a whipping boy which I don't think is constructive," he said.
Officials said they had been working on the plans for weeks. But they go much further than the original proposal presented by the Treasury in June.
Mr Obama said he was adopting the ideas of Paul Volcker, White House adviser and former Federal Reserve chairman, who has been advocating a big regulatory overhaul in "the spirit of Glass-Steagall" for months.
Banks declined to comment but executives privately suggested that the plans could usher in structural change and even prompt Goldman and Morgan Stanley to give up their bank holding company status gained in the crisis.
http://www.ft.com/cms/s/0...f-b426-00144feabdc0.html
What is considered "prop trading". Him and Volcker have lost it.
I want to hear your guy's thoughts.
