US President Barack Obama has proposed significant new curbs on the activities of banks to try to prevent future financial crises.

 

"Never again will the American taxpayer be held hostage by banks that are too big to fail," Mr Obama said.

 

The plans - the most far-reaching yet -include limits to the size of banks and restrictions on riskier trading.

 

US stocks such as JP Morgan Chase and Bank of America - fell sharply as the sweeping new rules were announced.

 

JP Morgan lost 6.6%, while Bank of America gave up 6.2%.

 

Limiting risk taking

 

"While the financial system is far stronger today than it was one year ago, it is still operating under the exact same rules that led to its near collapse," Mr Obama said.

 

His proposals also include a ban on retail banks from using their own money in investments - known as proprietary trading. Instead, banks would be limited to investing their customers' funds.

 

"Banking reforms do not come bigger than those proposed by President Obama," the BBC's business editor Robert Peston said.

 

This may mean that some of the US' biggest banks, such as Bank of America and JP Morgan, whose shares were badly hit, may have to be broken up.

 

The industry lobby group for banks suggested Mr Obama was trying to return the US to the past.

 

"The better answer is to modernize the regulatory framework and not take the industry and the economy back to the 1930s," said the Financial Services Roundtable, an industry group that represents large Wall Street institutions.

 

In the UK, shadow chancellor George Osborne said that if the Conservatives win the next general election, they would impose an identical dismantling of UK banks to those suggested by the US president.

 

Banks have also been lobbying against more stringent regulation.

 

"If these folks want a fight, it's a fight I'm ready to have," Mr Obama vowed.

 

The moves follow popular anger at financial institutions, who have been paying large bonuses to staff even as they accepted government bail-outs to keep them going.

 

Source: BBC news

 

It comes as no surprise to me that all the banks have been awarding themselves obscene bonuses, because they are arrogant leeches. They don't live in the real world as one of them, Goldman Sachs said it will pay $16.19bn in bonuses and benefits for the whole year, up 48% from 2008. That is an individual bonus of 1/2 million dollars to each employee. :o

 

Morgan Stanley's bonuses will rise 31% to $14.4bn. <_<

 

Citigroup - which reported a loss in 2009 and a significant minority of its shares held by the US taxpayer - plans to pay its bankers $25bn, down 20% from the previous year. <_<

 

 

To me the banks should be hit with supertax to get all the bail out money back. They have been making these huge profits on the back of the bailout and Government support, and low interest rates. Meanwhile the rest of us in work, make do with a pittance of a rise if any at all. Or if we are unlucky we joined the dole queue.

 

Makes you weep sometimes.

Now he lost a Senate seat, he may not be as tough as you imagine.

I have to say I support Obama 100% in this, and also in his Healthcare Reforms... I hope he really can push through the changes he wants to see in the US... He's potentially the US's greatest president since Roosevelt or Kennedy if he can pull this off.... He needs to close down GITMO and get the troops home as well though....

 

The fact of the matter is, he's right, the people of not only America, but BRITAIN as well should never EVER be obliged to bail out failing banks ever again.... If the only way to guarantee this is by breaking up the banks, then so be it... High Street, retail banks should NOT be speculating and playing around in the stock market, we need a return to good, common sense financial PRUDENCE.... You know, the sort of thing that Gordon fukkin' Brown was supposed to deliver as Chancellor, but ultimately didn't because he was too much in bed with the City Fat Cats...... <_<

 

We need a return to Old Fashioned High St banking, which was based on common sense economics and proper accounting and not nebulous schemes and "hedging".... Good luck to Obama.....