Obama Proposes Tough Limits On Largest Banks

From the Washington Post:

President Obama expanded his new offensive on Wall Street on Thursday, proposing rules that would impede the growth of the largest banks and bar them from making what he called "reckless" investments.

The proposal comes as the administration is shifting from its year-long effort to save financial firms toward a new willingness to confront them with explicit prohibitions on activities that fueled the economic crisis. In essence, Obama is now aiming to force the firms to choose between the federal benefits that come with being a bank and the unbridled pursuit of profits.

After opposing proposals such as hard limits on executive bonuses, the administration is embracing a tougher line — more evidence that Obama has the industry in his sights as he seeks to show Middle America that he feels its economic pain.

Obama’s plan would bar banks from making investments that are not intended to benefit customers, including the creation of proprietary investment funds solely to benefit employees and shareholders. New limits also would make it difficult for the largest banks to become any bigger, effectively stopping domestic expansion at well-known companies such as Bank of America and J.P. Morgan Chase.

While the proposed restrictions are narrower than the now-defunct law that segregated Wall Street trading from commercial banking for much of the 20th century, they share a similar goal: to subsidize banking — which the administration considers vital to the economy — without having taxpayers subsidize highly speculative activity.

According to the Washington Post, the bankers are not happy. This, coupled with Obama’s proposed a fee on big banks to recoup losses from the government’s $700 billion program to bail out financial firms, some bankers say they wish they could take their votes — and monetary contributions — back from Obama.

Did they think they were buying the presidency?

I heard comments disguised as reporting on Chicago’s WBBM today claiming that the drop in the stock market today is directly because of this announcement by the president.

So, did the value of the stocks of the various banks take a dip today? Then they were worth too much to begin with. A bank that is too big to fail is too big to fail. We’ve heard that so many times over the past year or so, and it’s true.

Bring it, Barry. And then bring some more.