President says he is prepared to “fight” the lobbyists
American President Barack Obama has announced significant new regulations to try and prevent a repeat of the financial crisis.
The plans include limits to the size of banks and restrictions on riskier trading, according to reports.
"Never again will the American taxpayer be held hostage by banks that are too big to fail," Obama told Wall Street. He added that he was prepared for a “fight” to get his strict measures through.
Banking stocks took a hit as news of the reforms broke. JP Morgan Chase lost 6.6%, while Bank of America gave up 6.2%, reported the BBC.
Following the collapse of Lehman, the US government pumped billions of dollars into the financial system and took major stakes in large Wall Street banks.
“We should no longer allow banks to stray too far from their central mission of serving their customers. In recent years, too many financial firms have put taxpayer money at risk by operating hedge funds and private equity funds and making riskier investments to reap a quick reward,” said the President.
Obama outlined his proposals for bank regulation in June and these included tougher powers for the Federal Reserve to oversee large banks that pose a systemic risk, registration of hedge funds and a consumer protection agency.
"Banking reforms do not come bigger than those proposed by President Obama," wrote the BBC's business editor Robert Peston online. He said it may result in the break up of some big US banks.
According to reports, the UK’s shadow chancellor George Osborne said that if the Conservatives win the next general election, they would impose identical regulations as the ones suggested by the US president.
Elsewhere online:
BBC News - Obama pushes new bank regulation
Obama Reveals Bank Regulation Plan - CBS News
