Under fancy names like Financial Derivatives etc, Banks have strayed away from the their basic business , that is keeping public money safe and invest only in sound stocks and near nil risk lending with adequate collateral.
Indulging in Proprietary Trading in essential commodities like online Trading commodities, not only pushes up the price of essentials because of speculative trading, also risks Banks investments in this sector.
Very good move by Obama,no doubt he will be unpopular and be targeted by corporation lobbyists.
Barack Obama declared war on Wall Street last night as he unveiled a sweeping series of measures aimed at checking the behaviour of banks and clamping down on risky deals.
The proposals, regarded as the biggest regulatory crackdown on banks since the 1930s, would limit the size of institutions and bar them from the most cavalier trading practices. Mr Obama hopes that the move will reset his flagging presidency.
“We should no longer allow banks to stray too far from their central mission of serving their customers,” he said. “My resolve to reform the system is only strengthened 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. If these folks want a fight, it’s a fight I’m ready to have. Never again will the American taxpayer be held hostage by a bank that is too big to fail.”
Flanked by his economic advisers, he said that Wall Street banks must: halt “proprietary trading”, where banks risk huge sums predicting the outcome of future moves in the price of commodities such as oil; operate more cautiously and have more available funds; not become too large by limiting the amount of ordinary banking business they can undertake.
http://www.timesonline.co.uk/tol/news/world/us_and_americas/article6997741.ece
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