Defaulting banks - where will it stop?

[Jan Klimkowski]

Big kudos to Obama. He appears finally to have understood the huge and predatory danger that near totally unregulated financial markets pose to ordinary people and national economies.

The President’s proposal would strengthen the comprehensive financial reform package that is already moving through Congress.

“While the financial system is far stronger today than it was a year one year ago, it is still operating under the exact same rules that led to its near collapse,” said President Barack Obama. “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 proposal would:

1. Limit the Scope - The President 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.

2. Limit the Size - The President also announced a new proposal to limit the consolidation of our financial sector. The President’s proposal will place broader limits on the excessive growth of the market share of liabilities at the largest financial firms, to supplement existing caps on the market share of deposits.

In the coming weeks, the President will continue to work closely with Chairman Dodd and others to craft a strong, comprehensive financial reform bill that puts in place common sense rules of the road and robust safeguards for the benefit of consumers, closes loopholes, and ends the mentality of “Too Big to Fail.” Chairman Barney Frank’s financial reform legislation, which passed the House in December, laid the groundwork for this policy by authorizing regulators to restrict or prohibit large firms from engaging in excessively risky activities.

As part of the previously announced reform program, the proposals announced today will help put an end to the risky practices that contributed significantly to the financial crisis.

http://www.whitehouse.gov/the-press-offi...ons-rein-e

These proposals still have to be passed into law, and I anticipate huge opposition from investment banks, hedge funds, private equity funds etc through their bought and owned corrupt Senators and Congressmen. The markets have already declined sharply as the banker piggies see the trough full of taxpayer's money being dragged away from their dribbling snouts.

If passed intact, this legislation will prevent the likes of Goldman Sachs, JP Morgan, Citibank, hedge funds, private equity funds etc trading with massive amounts of capital that they do not have, and where the risk of failure does not exist because these institutions are "too big to fail" and therefore get bailed out with our taxpayer money when their insane bets fail.

Obama has declared war on Wall Street greed and recklessness.

Good for him.

I hope his legislation makes it onto the books with teeth still intact.

However there are very powerful deep political forces which are totally opposed to the changes as proposed.

Those forces are utterly ruthless.