Cookies must be enabled. Bashing the bankers is making Obama go blind. It’s the oldest trick in politics: when you’re in trouble, change the subject. And so two days after his administration and party were reeling after losing the special senate election in Massachusetts, President Barack Obama announced a plan that places new restrictions on banks’ activities and overall size. First, he called for a ban on commercial banks (like high-street banks) from trading using depositors’ money unless directly on behalf of customers (so-called ‘proprietary trading’), and from owning, investing or sponsoring hedge funds or private equity funds. Second, he proposed expanding the current cap on the market share of deposits (set at 10 per cent) to other liabilities. Obama’s proposals follow on the heels of other bank-bashing moves in recent weeks.
In mid-December he blasted ‘fat cat’ bankers during a TV interview. On 14 January he announced a new tax on the larger banks, with the aim of recouping some of the costs of the financial bailout. Bankers bite back against regulation threats at Davos | Business. International bankers joined forces on the opening day of the World Economic Forum in Davos to warn governments against proposals to limit their activities. Moves to restrict banks to certain types of activities would do more harm than good, they said. Several top bankers were present in the Swiss resort to fight what they fear will be over-regulation in the aftermath of the global financial crisis.
Barclays Bank President Bob Diamond said he has "seen no evidence that suggests that shrinking banks is the answer" to preventing a future meltdown. Barclays' Robert Diamond was vocal about his feelings "If you step back and say large is bad, and we move to narrow banking, the impact of that on banks and on global trade, the global economy, would be very negative," he said.
Standard Chartered CEO Peter Sands said there was a growing risk that fragmented regulatory initiatives would "create enormous amounts of complexity. " Break up of bad banks? Economic confidence up. World - Davos to hear of rebound in public trust. Leaders in Davos blame bonuses for collapse of trust | Business. The head of HSBC has blamed excessive pay for a collapse in trust in the financial sector, as executives lined up at the World Economic Forum in Davos to stress that the economic crisis would prompt curbs on boardroom rewards.in Stephen Green, HSBC's chairman, said there had been a "huge and growing disparity between different levels of income," and that one positive aspect of the current crisis was that the problem would now be addressed.
Other leading business figures also admitted that the outrage expressed by Barack Obama at the bonuses paid on Wall Street after one of its worst ever years meant reform of pay was inevitable. Duncan Niederhauer, chief executive of NYSE Euronext, said: "It is quite clear that some of the compensation models at these firms have to be not just incrementally changed but completely overhauled.
" Regulators have already indicated that they will look unfavourably on companies that provide short-term incentives for traders to behave recklessly.