Obama to Propose New Limits on Banks

[highplainsdem]

http://online.wsj.com/article/SB10001424052748704320104575015910344117800.html

JANUARY 20, 2010, 9:53 P.M. ET

Obama to Propose New Limits on Banks

By DAMIAN PALETTA and JONATHAN WEISMAN


WASHINGTON – 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."

-snip-

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by the Depression-era Glass Steagall Act, which essentially walled off commercial banks from investment banks and was repealed in 1999.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.

[MadHound]

1. Instead of just returning "in spirit" to the curbs of the Great Depression we do so in fact?

Reinstitute Glas-Steagal and the rest. Otherwise the banksters will run this country into the ground. It may be too late anyway.

[MannyGoldstein]

2. "Spirit of Glass-Steagall"

Dear Lord, how damned stupid does Obama/Emanuel think we are? Really?

If they want to fix it, bring back Glass-Steagall. If they want to evade fixing it, then do the "spirit of Glass-Steagall".

[rockymountaindem]

3. Okay! More of this is just what we need n/t

[TxRider]

4. Break them up

Just like we did standard oil and ATT.

Too big to fail should be a violation of anti trust law.

[Canuckistanian]

5. Well, let's get just get Max Baucus to work, then

I'm confident he'll come up with a sure-fire way to effectively rein in those pesky banks.

[Grand Taurean]

6. Break them up.

And repeal the commodities modernization act of 2000.

[Autumn]

7. "at least in spirit"

How about we just break the fuckers up. If they are too big to fail,they are too fucking big. Spirit, my ass.

[amborin]

8. k&r but "the administration's latest assault on Wall Street" um, when was the 1st assault?

the banking reform legislation was so full of loopholes.....

and the new banking tax is pocket change.....

hope this is not more empty populist rhetoric to assuage growing anger?

[RB TexLa]

9. Won't stand up in court, Glass Steagall is history which means you can't enforce it's "spirit"

[frustrated_lefty]

10. Put up or shut up.

[Hugabear]

11. Nationalize the banking industry

Long overdue.

[Yurovsky]

14. Hell yes...

didn't we already buy them? I always thought once you paid for something you owned it, but then again, I'm not a lawyer, so I could be wrong...

[BlueDemKev]

12. Whoopee.

:eyes:

[Canuckistanian]

13. They're still allowed to charge 40% interest

But they're now required to show guilt.

It's an improvement.

[C_Lawyer09]

15. The truth of the matter

Incremental and retroactive punishment, anything less than Glass Stegall, will lower investments, and push bad banking policy onto the little guy. It will also make the already stingy banks even less likely to loan to small business. This in turn will start a cycle of ill thought out legislation that produces unintended consequences which we'll deal with later, in the form of less employment or some other malady that will be blamed on something else entirely. We missed a golden opportunity by saving the banks. PossiblePain in the near term, would have been gain in the long term.