The President proposed new regulations for the banking industry this week, in an effort to curb risk taking as well as limiting the size of some of the nation’s largest banks. Former Federal Reserve Chairman Paul Volcker now one of Obama’s key economic advisers has been advocating stricter limits on the banking sector or some time.
The proposed regulations would eliminate proprietary trading at banks as well as the investment or running of equity and hedge funds. It would also seek to slow consolidation in the banking industry by putting new caps on market share of liabilities.
They want banks to be more like banks and limit the activities that put customer deposits at risk. It’s also clear the government wants to avoid the “too big” to fail scenario that the nation went through last year.
Some opponents have criticized that the new regulations and last week’s fee proposal as misguided attempts trying to capitalize on voter anger in the wake of Scott Brown’s surprise victory in Massachusetts last week. Whether or not this is the case, the banking industry is taking it seriously and have been outspoken against the proposals which they believe would restrict credit at time when the banking system has yet to fully recover from last year’s financial crisis.
Source: www.banks.com.
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