22 Apr 2010

Obama pushes case for bank reform bill

President Obama is to make a speech to the financial leaders in New York to push the case for more government regulation of the big banks.

A White House spokesperson said the President would argue that, without new rules, there could be a repetition of the banking crisis.

BBC North America Editor, Mark Mardell, says this will be part-lecture, part-appeal to the Wall Street and 100% political strategy.

He will tell financiers that it is in their interests to have new rules, not to fight them and that they should lean on politicians in Washington and urge them to pass the new legislation.

Despite a lot of intense wooing not a single Republican in the Senate plans to vote for the new laws at the moment. But they all understand what the President is up to. If they vote against his plan, when it comes to the Senate and House elections in the Autumn, they will be painted as the party that backed their wealthy friends on Wall Street, and put at risk the people on Main Street.

The proposed rules would include a new body to safeguard consumers' rights - a consumer protection agency at the US central bank, the Federal Reserve - which would have powers to regulate all lending.

The bill also includes the formation of a nine-member Financial Stability Oversight Council, which would have powers to break up large companies if they were deemed to pose a threat to the stability of the financial system.

It also suggests limiting banks' involvement in proprietary trading - where they trade their own money rather on behalf of investors - and their investments in hedge funds...

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