President Obama has called for new restrictions on large financial institutions' size and scope – the latest move in the administration's efforts to revamp the banking industry.
Dubbed the ‘Volcker Rule’ after former Federal Reserve chairman and Obama advisor Paul Volcker, the administration's newest proposal seeks to rein in institutions' excessive risk taking, a White House statement says.
‘While the financial system is far stronger today than it was a year ago, it is still operating under the exact same rules that led to its near collapse,’ Obama said. ‘My resolve to reform the system is only strengthened when I see a return to old practices at some of the very firms fighting reform, and when I see record profits at some of the very firms claiming that they cannot lend more to small business, cannot keep credit card rates low and cannot refund taxpayers for the bailout. It is exactly this kind of irresponsibility that makes clear reform is necessary."
The administration's proposal was scant of details Thursday, only outlining its goals of limiting insitutions' scope and size. In regard to the former objective, the White House statement says Obama and his economic team will work with Congress to ‘ensure that no bank or financial institution that contains a bank will own, invest in or sponsor a hedge fund or a private equity fund, or proprietary trading operations unrelated to serving customers for its own profit.’ Obama is also looking to limit financial-sector consolidation in an effort to end the ‘too big to fail’ mentality.
The administration additionally notes that Obama will work with Senate Banking Committee Chairman Chris Dodd, D-Conn., to weave his proposals into that chamber's financial reforms debate.
SOURCE: White House