OBAMA PUSHES NEW LIMITS ON BANKS…. Now, there’s a good soundbite from the president: “[I]f these folks want a fight, it’s a fight I’m ready to have.”
The comment came during a White House event this morning, in which President Obama proposed some new restrictions on some of the nation’s largest banks, including “The Volcker Rule,” named after former Fed Chairman Paul Volcker, which says that “banks will no longer be allowed to own, invest or sponsor hedge funds, private equity funds, or proprietary trading operations for their own profit unrelated to serving their customers.”
Obama added, “I’m also proposing that we prevent the further consolidation of our financial system. There has long been a deposit cap in place to guard against too much risk being concentrated in a single bank. The same principle should apply to wider forms of funding employed by large financial institutions in today’s economy. The American people will not be served by a financial system that comprises just a few massive firms. That’s not good for consumers; it’s not good for the economy. And through this policy, that is an outcome we will avoid…. Never again will the American taxpayer be held hostage by a bank that is ‘too big to fail.’”
But it was the rhetoric towards the end that signals a shift in emphasis from the White House: “So if these folks want a fight, it’s a fight I’m ready to have. And my resolve is only strengthened when I see a return to old practices at some of the very firms fighting reform; and when I see soaring profits and obscene bonuses at some of the very firms claiming that they can’t lend more to small business, they can’t keep credit card rates low, they can’t pay a fee to refund taxpayers for the bailout without passing on the cost to shareholders or customers — that’s the claims they’re making. It’s exactly this kind of irresponsibility that makes clear reform is necessary.
“We’ve come through a terrible crisis. The American people have paid a very high price. We simply cannot return to business as usual.”
It’s seemed as if Volcker was on the outside looking in for much of the last year. I think that’s changing.