The Banking and Strategy Initiative

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More Reforms | Advantage Banking

Are you thinking what are bank reforms? Are you thinking about the Global Impact? Are you thinking about the impact in your county? Ask us and we’ll let you know.

MARKETWATCH.COM:

News Hub: White House to Limit Size of Banks

The White House is signaling that they want to limit the size of banks, to prevent future taxpayer bailouts, the News Hub panel discusses.

“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,” Obama added.

The proposal aims to deter commercial banks from becoming so large that they put the broader economy at risk and distort normal competitive forces. It also could require some big banks to divest hedge funds, private equity investments and proprietary trading investment banking units so they can continue to operate as commercial banks.

Key measures mentioned by Obama directly in his statement from the White house are:

A.  Banks should not be allowed to own Private Equity Arms and Hedge Funds

B.  Like the current caps on deposits with a single bank, there will be risk limits to avoid further consolidation of risk in the banking system

These will be Reforms to protect consumers and Reforms to close loopholes that allow big banks to trade risky financial derivatives like credit default swaps without oversight ( prop trading desk risk limits, off-balance sheet exposure restricted) without oversight..to strengthen liquidity and ensure that no large firm can take the entire economy down because it is “TOO BIG TO FAIL”

The VOLCKER RULE will restrict banks under the purview of Federal Deposit Guarantee from operating Hedge funds and PE funds inside banks esp as Taxpayers won’t pay when the bank fails

Goldman Sach’s earned 80% of its profits in 2009 from proprietary trading

Don’t forget our O’nomics Blog that whispers the answers for the Big 4 and the banks in the US for US Markets and their own trajectory Also our sister blog for Marketing and Branding is an Adage Power Blog in Marketing

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This entry was posted on January 22, 2010 by in Emerging Markets, Financial Markets, Meltdown, O'nomics, Private Equity, Uncategorized and tagged , , .

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