US President Barack Obama has continued his campaign to rein in the activities of his country’s financial institutions, and is now looking to stop banks owning or investing in hedge funds and private equity funds.
Obama’s proposal, if implemented, would restrict any bank or financial institution that contains a bank from owning, investing in or sponsoring hedge funds or private equity funds.
The US President is also looking to restrict the level of consolidation that can occur in the US financial sector. He aims to do this by placing limits on the market share of liabilities for the largest financial firms. This move would supplement the existing caps on the market share of deposits, the White House statement said.
The proposals are part of a broad and ongoing reform program which Obama hopes will rein in the excessive risk taking that has been blamed for the global financial crisis, and which left taxpayers suffering while financial institutions returned to their former profitable form.
“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,” US President Obama said.
“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; and when I see record profits at some of the very firms claiming that they cannot lend more to small business, cannot keep credit card rates low, and cannot refund taxpayers for the bailout. It is exactly this kind of irresponsibility that makes clear reform is necessary.”
Those assisting Obama in this leg of the reform package include former US Federal Reserve chairman Paul Volcker and former US Securities and Exchange Commission chairman Bill Donaldson.
