President Barack Obama on Thursday called for changes in pending financial reform legislation to limit the size and scope of banks in order to guard against excessive risk-taking.
Obama, who spoke at the White House, wants the legislation to require that no bank or financial institution that includes a bank will “own, invest in or sponsor a hedge fund or a private equity fund, or proprietary trading operations unrelated to serving customers for its own profit,— according to a White House summary of the plan.
The proposal would also take steps to curtail consolidation of the financial sector by limiting the ability of the largest financial firms to grow.
“Never again will the American public be held hostage to a bank that is too big to fail,— Obama said. “The American people will not be served by a financial system that comprises just a few massive firms. That’s not good for consumers, it’s not good for the economy.—
The president flashed some of the anger he has shown in recent weeks at what he calls a return to former business practices by the financial industry, particularly the granting of large bonuses. While offering to work with the industry, he made clear that he is furious with them for lobbying against the legislation
“If these folks want a fight, it’s a fight I’m ready to have,— he said.
“And my resolve is only strengthened when I see a return to old practices at some of the very firms fighting reform, and when I see soaring profits and obscene bonuses at some of the very firms claiming that they can’t lend more to small businesses, they can’t keep credit card rates low, they can’t pay a fee to refund taxpayers for the bailout without passing on the cost to shareholders or customers — and that’s the claims they’re making.—
Obama was joined at the White House by House Financial Services Chairman Barney Frank (D-Mass.), Senate Banking, Housing and Urban Affairs Chairman Chris Dodd (D-Conn.), former Federal Reserve Chairman Paul Volcker, and former Securities and Exchange Commission Chairman Bill Donaldson.