President Obama has threatened banks with new regulatory proposals that would limit financial risk taking.
President Obama proposes preventing banks from investing in, owning or sponsoring a hedge fund or private equity fund. He also wants to limit the size of banks.
President Obama said:
"We have to get this done. If these folks want a fight, it's a fight I'm ready to have."
Unsurprisingly shares in banks, both in the US and UK, have taken a tumble.
Obama's proposals have brought further uncertainty to the banking sector, this uncertainty will last for months whilst the proposals are actually being fleshed out. It is likely that whatever finally comes to fruition in the US will, to some extent, be copied in Europe. US officials are reportedly coming to the UK next week, to persuade Brown and Darling to enact similar measures.
Doubtless this will play well to the Democrat voters in the all important midterms. However, as to whether this actually comes to fruition in the form suggested by the headlines, and positively contributes to an improvement in the global economy, remains to be seen.
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