President Obama is expected to announce on Thursday new limits on the size and risk that is allowed to be taken by the country’s biggest banks. If true, and not some watered down nonsense, then this would truly be a step in the right direction.
President Barack Obama on Thursday is expected to propose new limits on the size and risk taken by the country’s biggest banks, marking the administration’s latest assault on Wall Street in what could mark a return – at least in spirit – to some of the curbs on finance put in place during the Great Depression, according to congressional sources and administration officials.
The proposal represents a sharply different philosophical shift from the view of banking over the last decade, which saw widespread consolidation among large financial institutions to create huge banking titans. If Congress approves the proposal, the White House plan could permanently impose government constraints on the size and nature of banking.
Mr. Obama’s proposal is expected to include new scale restrictions on the size of the country’s largest financial institutions. The goal would be to deter banks from becoming so large they put the broader economy at risk and to also prevent banks from becoming so large they distort normal competitive forces. It couldn’t be learned what precise limits the White House will endorse, or whether Mr. Obama will spell out the exact limits on Thursday.
Mr. Obama is also expected to endorse, for the first time publicly, measures pushed by former Federal Reserve chairman Paul Volcker, which would place restrictions on the proprietary trading done by commercial banks, essentially limiting the way banks bet with their own capital. The goal, as described by administration officials, would be to prevent banks from using federally insured deposits to finance "speculative activity." […]
[…] The White House’s proposal, one aide said, would not resurrect the exact limits put in place by the Depression-era Glass Steagall Act, which essentially walled off commercial banks from investment banks and was repealed in 1999. Instead, the White House proposal would seek to return the "spirit of Glass Steagall," meant to limit large banks from becoming too big and complex that create enormous risk.[…] WSJ
White House aide says it will be in the ‘spirit’ of Glass-Steagall. Spirit? Now I know this is going to be nothing but BS. As I have opined numerous times, unless Glass-Steagall is reinstated anything else is just more flapping of the gums.
I suspect the tough talk from Obama is in response to the beating the democratic party is taking for being too comfy with Wall Street. Could it be that the Senate election of republican Scott Brown last night finally has President Obama waking up and learning that there are actually people in this nation he has to answer to? Probably not, but it was a nice thought that lasted all of two microseconds.
Anyone care to wager that this never sees the light of day (becoming law), and that it is just ‘tough talk’ on the heels of the massive slap in the face from the defeat in the Massachusetts senate race.
“Alex, I’ll take EMPTY PROMISES for $200 please”
