Obama outlines new limits on bank risk-taking

posted by GeoT
Obama’s plan is broad, recalls Depression-era curbs

“If these folks want a fight, it’s a fight I’m ready to have.”

Full replay of announcement:
The “Volcker Rule” for Financial Institutions
President Obama calls for new restrictions on the size and scope of financial institutions to rein in excessive risk-taking and protect taxpayers. The proposed legislation is called the “Volcker Rule” in recognition of the efforts of former Federal Reserve Chairman and current President’s Economic Recovery Advisory Board Chairman Paul Volcker.
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Filed under Economics, Economy, Jobs, Money, Stimulus, Uncategorized

9 responses to “Obama outlines new limits on bank risk-taking

  1. ogenec

    Good man. This is what happens when ya eats yer vegetables — ya gets big and strong!! Own the MA loss, don’t deflect it to Coakley, then focus on the economy and force the Republicans to stand up for the status quo.

  2. wow, no bank can own hedge funds…

    well, the stock market HATES this, I even heard the term “phony leftist populism” used by a CNBC host. (Kudlow)

    If they don’t like it maybe this is a step in the right direction.

    • Obama is finally listening to Paul Volcker, which is what he should have been doing all along. It is a pure conflict of interest for investment banks to engage in the kind of proprietary trading that hedge fund engage in. The banks take cheap money in the form of deposits guaranteed by the FDIC and zero-cost loans from the government, and then turn around and place risky bets on movements in securities and commodities. That is a clear conflict of interest. Indeed, some of these investmentsbanks are underwriting securities, selling them to the public, while their trading desks are making money shorting them!

      This is exactly what banks cannot do. It’s just like the go-go days of the late 20s and early 30s, when Congressional hearings, chaired by Ferninand Pecora, exposed similar abuses that led to the Glass-Steagall Act. Pecora wrote a book about this, called “Wall Street Under Oath.” It’s out of print, but it should be reissued. Because anyone who reads it will be gobsmacked at the eerie parallels between then and now.

      THIS is the fella I voted for! I’m a happy man today.

  3. again, when I see the conniption fits from the supposedly neutral hosts on CNBC I can’t help but think that these proposed regulations have struck a big nerve. Most of these hosts are ex Wall Street so their allegiances are with the banks, not with the average citizen.

    As Ogenec says let’s see the critics come to the defense of the banks and brokerages that created the crisis in the first place…

    • Exactly right. I’m no populist. I’m a hard-core capitalist. My experience growing up in Nigeria has convinced me that capitalism, as Churchill said of democracy, is the worst economic system — except for all the rest. LOL.

      But I believe that free markets require openness and transparency. And hedge funds masquerading as commercial banks pose a serious threat to the economy. Which is why I was elated to hear Obama talk during the campaign about regulating financial institutions according to what they do, not what they are called.

      So yeah, the Dow is down over 200 and counting. Wall Street always overreacts, and there will be a rebound in the next week or do. But to the extent that these conflicts of interest were leading to another speculative bubble — and I believe that they were — the sell-off is a welcome market correction.

  4. what you won’t hear on CNBC:

    while the BIG bank stocks are tanking the smaller, local, community banks, are jumping, which indicates smaller banks will have a fighting chance to compete.

    MBHIP Midwest Banc Holdings, Inc. 2.50 11:55AM ET Up 0.56 (28.87%)

    BOFL Bank of Florida Corporation 1.44 12:10PM ET Up 0.32 (28.57%)

    FTBK Frontier Financial Corporation 4.38 12:11PM ET Up 0.74 (20.33%)

    HAFC Hanmi Financial Corporation 2.48 12:12PM ET Up 0.43 (20.98%)

    RBPAA Royal Bancshares of Pennsylvani 2.77 12:04PM ET Up 0.43 (18.38%)

    FBP FIRST BANCRP HLDG CO 2.68 12:12PM ET Up 0.35 (15.02%)

    GRNB Green Bankshares, Inc. 5.96 12:08PM ET Up 0.90 (17.79%)

    PCBC Pacific Capital Bancorp 1.58 12:12PM ET Up 0.22 (16.18%)

    UWBK United Western Bancorp, Inc. 3.19 12:11PM ET Up 0.35 (12.32%) 211,492 Chart,

    NBN Northeast Bancorp 9.67 10:55AM ET Up 1.17 (13.76%)

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