President Obama Announces New Bank Rules Proposals
President Obama introduced his new bank regulation proposals by reminding people why the Bush Administration was forced to bail out banks with tax payer money under the TARP program. He said that the problems with the economy began as a financial problem when, "banks took huge, reckless risks, in pursuit of quick profits and massive bonuses." He added, "when the dust settled several of the world's oldest and largest financial institutions had collapsed, or were on the verge of doing so. Markets plummeted, credit dried up, and jobs were vanishing by the hundreds of thousands each month."
The President then praised the House bank legislation already being worked on to prevent banks from ever again reaching 'too big to fail' status and affect the entire economy, and offered 2 more proposals called the Volcker Rule, after famed economist Paul Volcker. Central to the reforms proposed by Mr. Obama are limits imposed on financial firms to the amount of risk they can take, which is already being addressed in the House bill. President Obama said, "we should no longer allow banks to stray too far from their central mission of serving their customers," adding that banks were using people's money to make risky investments by running hedge funds and private equity finds using loop holes which allowed any loses to be covered by the Federal Deposit Insurance Corporation, making it a win, win for the banks. What this all means is that banks will no longer be allowed to own, invest in, or sponsor private equity funds, hedge funds, or proprietary trading operations for their own profit, unrelated to serving their customers.
The second problem addressed by the new proposals was the further consolidation of of the American financial system, which the President said was not good for the economy or the consumer. It is because of this that he proposed a deposit cap on the size of any one financial institution and suggested that he was ready to fight the lobbyists of the financial sector to get this passed.
Watch the clip below:
The President then praised the House bank legislation already being worked on to prevent banks from ever again reaching 'too big to fail' status and affect the entire economy, and offered 2 more proposals called the Volcker Rule, after famed economist Paul Volcker. Central to the reforms proposed by Mr. Obama are limits imposed on financial firms to the amount of risk they can take, which is already being addressed in the House bill. President Obama said, "we should no longer allow banks to stray too far from their central mission of serving their customers," adding that banks were using people's money to make risky investments by running hedge funds and private equity finds using loop holes which allowed any loses to be covered by the Federal Deposit Insurance Corporation, making it a win, win for the banks. What this all means is that banks will no longer be allowed to own, invest in, or sponsor private equity funds, hedge funds, or proprietary trading operations for their own profit, unrelated to serving their customers.
The second problem addressed by the new proposals was the further consolidation of of the American financial system, which the President said was not good for the economy or the consumer. It is because of this that he proposed a deposit cap on the size of any one financial institution and suggested that he was ready to fight the lobbyists of the financial sector to get this passed.
Watch the clip below:
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