The US President has announced plans to clip the wings of America’s biggest banks to curb the risks they can, and do, take.
It was excessive risk-taking that helped push the US, and world, economy into a prolonged and deep recession.
Barack Obama’s proposals are part of a wider overhaul of financial regulations.
The President said:
Banks will no longer be allowed to own, invest or sponsor hedge funds, private equity funds or proprietary trading operations for their own profit, unrelated to serving their customers. If financial firms want to trade for profit, that is something they are free to do. Indeed doing so responsibly is a good thing for the markets and the economy. But these firms should not be allowed to run these hedge funds and private equity funds while running a bank backed by the American people.
Obama has already acknowledged a deepening anger among voters that the government has bailed out the banks, while the US unemployment rate is at a 26 year high, and while the budget deficit will leave Americans in debt for years to come.