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| Obama pushes new bank regulation | Obama pushes new bank regulation |
| (10 minutes later) | |
| US President Barack Obama has proposed limits to the size of banks to try to prevent future financial crises. | US President Barack Obama has proposed limits to the size of banks to try to prevent future financial crises. |
| "Never again will the American taxpayer be held hostage by banks that are too big to fail," Mr Obama said. | "Never again will the American taxpayer be held hostage by banks that are too big to fail," Mr Obama said. |
| He recently announced a $117bn (£72bn) levy on banks to recoup money US taxpayers spent bailing out the banks. | He recently announced a $117bn (£72bn) levy on banks to recoup money US taxpayers spent bailing out the banks. |
| US stocks - especially banks such as JPMorgan Chase and Bank of America - fell sharply as Mr Obama announced the sweeping new rules. | US stocks - especially banks such as JPMorgan Chase and Bank of America - fell sharply as Mr Obama announced the sweeping new rules. |
| His proposals also include limits on the amount of risk banks can take, and banning retail banks from using their own money in risky financial transactions. | His proposals also include limits on the amount of risk banks can take, and banning retail banks from using their own money in risky financial transactions. |
| That prevents commercial banks from investing in hedge funds, private equity funds or engaging in so-called proprietary trading. | That prevents commercial banks from investing in hedge funds, private equity funds or engaging in so-called proprietary trading. |
| If these folks want a fight, it's a fight I'm ready to have Barack Obama href="http://www.bbc.co.uk/blogs/thereporters/robertpeston/2010/01/obama_to_break_up_banks.html">Peston: Obama to break up banks Pay and profits rise at Goldman | |
| "Banking reforms do not come bigger than those proposed by President Obama," the BBC's business editor Robert Peston said. | |
| This may mean that some of the US' biggest banks, such as Goldman Sachs, may have to be broken up. | |
| "While the financial system is far stronger today than it was one year ago, it is still operating under the exact same rules that led to its near collapse," Mr Obama said. | "While the financial system is far stronger today than it was one year ago, it is still operating under the exact same rules that led to its near collapse," Mr Obama said. |
| The move is Mr Obama's first proposal since Republican Scott Brown's shock victory in Massachusetts to win a Senate seat. | The move is Mr Obama's first proposal since Republican Scott Brown's shock victory in Massachusetts to win a Senate seat. |
| Tough new rules | Tough new rules |
| US stocks fell sharply after Mr Obama announced his plans. The US dollar also turned lower against the euro and UK pound. | |
| Mr Obama has proposed a raft of new regulation but it has been held up in political wrangling in both the Senate and House of Representatives. | Mr Obama has proposed a raft of new regulation but it has been held up in political wrangling in both the Senate and House of Representatives. |
| Mr Brown's victory may make it harder to pass the rules Mr Obama has proposed. | Mr Brown's victory may make it harder to pass the rules Mr Obama has proposed. |
| Banks have also been lobbying against more stringent regulation. | Banks have also been lobbying against more stringent regulation. |
| "If these folks want a fight, it's a fight I'm ready to have," he vowed. | "If these folks want a fight, it's a fight I'm ready to have," he vowed. |
| The president dubbed his proposals on limiting bank risk the Volcker rule - after Paul Volcker, one of his economic advisors and a former chairman of the Federal Reserve central bank. | The president dubbed his proposals on limiting bank risk the Volcker rule - after Paul Volcker, one of his economic advisors and a former chairman of the Federal Reserve central bank. |
| The moves follow popular anger at financial institutions, who have been paying large bonuses to staff even as they accepted government bail-outs to keep them going. | The moves follow popular anger at financial institutions, who have been paying large bonuses to staff even as they accepted government bail-outs to keep them going. |
| The tax will claw back some of the losses from a $700bn taxpayer bail-out of US banks known as the Troubled Asset Relief Program (Tarp). | The tax will claw back some of the losses from a $700bn taxpayer bail-out of US banks known as the Troubled Asset Relief Program (Tarp). |
| It was drawn up in the midst of the financial crisis in 2008, following the collapse of US investment bank Lehman Brothers and rescue of insurance giant American International Group (AIG). | It was drawn up in the midst of the financial crisis in 2008, following the collapse of US investment bank Lehman Brothers and rescue of insurance giant American International Group (AIG). |
| Mr Obama's proposals appear to be a return to the principles underlying the Glass-Steagall Act. | |
| That law - from the 1930s in the aftermath of the Great Depression - separated commercial and investment banking and was eventually abolished in 1999 under President Bill Clinton. | That law - from the 1930s in the aftermath of the Great Depression - separated commercial and investment banking and was eventually abolished in 1999 under President Bill Clinton. |
| Mr Clinton's financial secretary at the time, Robert Rubin, previously worked at Goldman Sachs and went on to be an advisor to Citigroup until last year. | Mr Clinton's financial secretary at the time, Robert Rubin, previously worked at Goldman Sachs and went on to be an advisor to Citigroup until last year. |