BBC: Obama pushes new bank regulation

[Scallypunk]

Tama tuli juuri BBS Newssilta, ja netista loytyi myos.

http://news.bbc.co.uk/1/hi/business/8473294.stm

US President Barack Obama has proposed significant new curbs on the activities of banks to try to prevent future financial crises.

"Never again will the American taxpayer be held hostage by banks that are too big to fail," Mr Obama said.

The plans - the most far-reaching yet -include limits to the size of banks and restrictions on riskier trading.

US stocks such as JPMorgan Chase and Bank of America - fell sharply as the sweeping new rules were announced.

Limiting risk taking

"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," Mr Obama said.

His proposals also include a ban on retail banks from using their own money in investments - known as proprietary trading. Instead, banks would be limited to investing their customers' funds.

   
If these folks want a fight, it's a fight I'm ready to have
Barack Obama

Tories back US bank limit plans

"Banking reforms do not come bigger than those proposed by President Obama," the BBC's business editor Robert Peston said.

This may mean that some of the US' biggest banks, such as Bank of America and JP Morgan, whose shares were badly hit, may have to be broken up.

The industry lobby group for banks suggested Mr Obama was trying to return the US to the past.

"The better answer is to modernize the regulatory framework and not take the industry and the economy back to the 1930s," said the Financial Services Roundtable, an industry group that represents large Wall Street institutions.

In the UK, shadow chancellor George Osborne said that if the Conservatives win the next general election, they would impose an identical dismantling of UK banks to those suggested by the US president.

The Treasury said it was considering the proposals "very carefully".

Fighting talk

Mr Obama's move is his first proposal since Republican Scott Brown's shock victory in Massachusetts to win a Senate seat.

The Republican victory may make it harder to get Mr Obama's proposals passed in the Senate, as they are more likely to get held up in political wrangling.

"This is a political effort because of what happened in Massachusetts," said economist Peter Morici of the University of Maryland.

   
The US President believes that banks are back to their bad old ways too soon after their woes led to the biggest bank global bail out in history
BBC business editor Robert Peston

Peston: Obama to break up banks

Banks have also been lobbying against more stringent regulation.

"If these folks want a fight, it's a fight I'm ready to have," Mr Obama vowed.

The president dubbed his proposals on limiting bank risk the Volcker rule - after Paul Volcker, one of his economic advisors and a former chairman of the Federal Reserve central bank.

The moves follow popular anger at financial institutions, who have been paying large bonuses to staff even as they accepted government bail-outs to keep them going.

The tax will claw back some of the losses from a $700bn taxpayer bail-out of US banks known as the Troubled Asset Relief Program (Tarp).

It was drawn up in the midst of the financial crisis in 2008, following the collapse of US investment bank Lehman Brothers and rescue of insurance giant American International Group (AIG).

Mr Obama's proposals appear to be a return to the principles underlying the Glass-Steagall Act.

That law - from the 1930s in the aftermath of the Great Depression - separated commercial and investment banking and was eventually abolished in 1999 under President Bill Clinton.

Mr Clinton's financial secretary at the time, Robert Rubin, previously worked at Goldman Sachs and went on to be an advisor to Citigroup until last year.

The latest proposals follow a $117bn (£72bn) levy on banks to recoup money US taxpayers spent bailing out the banks.

[Scallypunk]

Piti viela kysya teidan mielipiteita kyseisen suunnitelman lapiviennin mahdollisuuksiin? Karulta vaikuttaa nykyisilla kannatuslukemilla ja edustajainhuoneen menetyksen jalkeen. Voisiko kansan painostus ratkaista kuitenkin?

[Miniluv]

Olikohan tästä aloitteesta kysymys?

Dec. 30 (Bloomberg) -- To close out 2009, I decided to do something I bet no member of Congress has done -- actually read from cover to cover one of the pieces of sweeping legislation bouncing around Capitol Hill.

Hunkering down by the fire, I snuggled up with H.R. 4173, the financial-reform legislation passed earlier this month by the House of Representatives.

(...)

-- For all its heft, the bill doesn't once mention the words "too-big-to-fail," the main issue confronting the financial system. Admitting you have a problem, as any 12- stepper knows, is the crucial first step toward recovery.

-- Instead, it supports the biggest banks. It authorizes Federal Reserve banks to provide as much as $4 trillion in emergency funding the next time Wall Street crashes. So much for "no-more-bailouts" talk. That is more than twice what the Fed pumped into markets this time around. The size of the fund makes the bribes in the Senate's health-care bill look minuscule.

(...)

-- The bill also allows the government, in a crisis, to back financial firms' debts. Bondholders can sleep easy -- there are more bailouts to come.

(...)

bill contains a provision that, in the event of another government request for emergency aid to prop up the financial system, debate in Congress be limited to just 10 hours.