Obama takes on the banks

New limits to be imposed on the size and scope of financial institutions

Fightin’ words from Barack Obama. On Thursday, the president unveiled a series of new restrictions on the country’s banks. Aimed at freezing the growth of the “too big to fail” financial sector, the “Volcker rule,” (named after former federal reserve chairman Paul Volcker) will limit the size of banks and ban profit-making practices that are “unrelated to serving customers.” Explaining his motivation, Obama noted, “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.” The 2008 financial crisis was precipitated by proprietary trading, in which banks made risky trades from their own accounts in order to boost profits. That activity is separate from the traditional commercial activities of the banking sector: taking deposits and making standard loans.

New York Times

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