Newsmax TV & Webwww.newsmax.comFREE - In Google Play
Newsmax TV & Webwww.newsmax.comFREE - On the App Store
Skip to main content
Tags: US | Financial | Overhaul

Obama Wants Greater Banking Limits

Wednesday, 20 January 2010 11:54 PM EST

Stepping up pressure on Wall Street, President Barack Obama on Thursday plans to call for giving the government new powers to limit the size and complexity of large financial institutions and to limit their ability to engage in high-risk trades.

Obama will make the announcement Thursday, a senior administration official said, in a bipartisan display aimed at capitalizing on the one issue in his agenda still standing after a devastating Democratic electoral loss in Massachusetts.

The restrictions expand on previous administration positions and would strengthen measures already approved by the House. The Senate is in the midst of writing new banking regulations.

Obama is placing a new emphasis on Wall Street regulations, with a goal of limiting the financial sector to smaller, less interconnected firms. The complexity of the financial industry forced the government in 2008 to approve massive bailouts to prevent a systemwide economic collapse.

In making the announcement, the president will be flanked by former Federal Reserve Chairman Paul Volcker and William Donaldson, appointed by President George W. Bush as head of the Securities and Exchange Commission. Both men have advocated tighter banking restrictions. Volcker heads the President's Economic Recovery Advisory Board.

Obama last year proposed a series of measures to tighten the reins on financial institutions in hopes of preventing a recurrence of the crisis that struck both Wall Street and Washington in the fall of 2008.

But his announcement Thursday will broaden those measures, particularly by endorsing Volcker's proposal to restrict proprietary trading by commercial banks. Such a limit would separate commercial banks from investment banks, a line that was blurred a decade ago by the repeal of the Depression era Glass-Steagall Act.

The senior administration official, speaking on the condition of anonymity because the plan had not yet been made public, said Obama has been planning for months to toughen proposed legislation to reduce risk-taking and limit the size and scope of financial firms.

"The White House will work closely with the House and Senate to work this into legislation moving on the hill," the official said

News of the announcement came shortly after Treasury Secretary Timothy Geithner had a private dinner Wednesday night with chief executives from some of the top Wall Street banks.

It also came as banking regulation appeared to be the only plank in Obama's agenda able to survive a stunning Republican Senate victory in Massachusetts on Tuesday that significantly strengthened the GOP's bargaining hand.

The White House moved quickly to protect one of the proposed legislation's key but most endangered features: a new agency to protect consumers in their banking transactions.

"The president is not going to compromise because lobbyists tell somebody that we shouldn't have an agency that protects consumers," White House spokesman Robert Gibbs said. "That's something the president's not willing to give up."

The consumer protection agency is the subject of intense Senate negotiations, and aides and lobbyists said discussions centered on creating a new entity but without all the power sought by the administration. Obama stressed his desire for a consumer agency in a meeting Tuesday with Senate Banking Committee Chairman Christopher Dodd, D-Conn., but the White House did not comment on potential options.

There was also a new urgency in the Senate to move on the legislation — an attempt to respond to the voter anger that propelled Republican Scott Brown to victory in a contest for the seat formerly held by the late Democratic Sen. Edward Kennedy.

Brown's victory gave Republicans 41 votes in the Senate, enough to mount successful filibusters and prevent Democratic legislation on health care or climate change from getting final votes.

But financial regulations could survive.

"I don't want to see us have to go through what we've been through here where we've been relying on one party to get something," Dodd said Wednesday.

Moreover, Geithner met with Republican Senate leader Mitch McConnell of Kentucky on Tuesday. Administration officials now believe that while Republicans may seek to block other aspects of the president's agenda, McConnell is considering making financial regulation an exception.

To that end, Dodd has been negotiating with the Banking Committee's top Republican, Sen. Richard Shelby of Alabama.

"We're talking, and obviously my hope is that in the next few weeks we'll ... move forward," Dodd added.

Senate Democratic and Republican aides have been discussing consumer alternatives, including one that would create a new division within an overarching banking regulator. The entity would have its own budget and would have the power to write new consumer regulations. Enforcement would be left to bank regulators.

White House officials would not say whether such a compromise would be acceptable. And congressional officials cautioned that the plan was still in flux and could change.

© Copyright 2023 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Stepping up pressure on Wall Street, President Barack Obama on Thursday plans to call for giving the government new powers to limit the size and complexity of large financial institutions and to limit their ability to engage in high-risk trades.Obama will make the...
Wednesday, 20 January 2010 11:54 PM
Newsmax Media, Inc.

Sign up for Newsmax’s Daily Newsletter

Receive breaking news and original analysis - sent right to your inbox.

(Optional for Local News)
Privacy: We never share your email address.
Join the Newsmax Community
Read and Post Comments
Please review Community Guidelines before posting a comment.

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

America's News Page
© Newsmax Media, Inc.
All Rights Reserved
Download the NewsmaxTV App
Get the NewsmaxTV App for iOS Get the NewsmaxTV App for Android Scan QR code to get the NewsmaxTV App
America's News Page
© Newsmax Media, Inc.
All Rights Reserved