Thursday, January 21, 2010

FINALLY...Some Change to Believe In!!!!

Proposal Set to Curb Bank Giants

Obama Seeks To Return to the Spirit Of Glass-Steagall

WSJ: President Obama meets with Paul Volcker and proposes new banking firewalls in the "spirit of Glass-Steagall."
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. Administration officials say they want to place 'firewalls' between different divisions of financial companies to ensure banks don't indirectly subsidize 'speculative' trading through other subsidiaries that hold federally insured deposits.

The White House's proposal, one aide said, wouldn't 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by the Depression-era Glass Steagall Act, which essentially walled off commercial banks from investment banks and was repealed in 1999.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.
This is the path for change that will truly help regulate the billionaire banks. Self-regulation never works.

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