"Declaring that huge banks had nearly brought down the economy by taking “huge, reckless risks in pursuit of profits,” President Obama proposed legislation on Thursday to limit the scope and size of large financial institutions, The New York Times’s Sewell Chan reports from Washington.
The changes would prohibit bank holding companies from owning, investing in or sponsoring hedge fund or private equity funds or engaging in proprietary trading — what Mr. Obama called the Volcker Rule, in recognition of the former Federal Reserve chairman, Paul A. Volcker, who has championed the restriction.
In addition, Mr. Obama will seek to limit consolidation of in the financial sector, by placing curbs on the growth of the market share of liabilities at the biggest firms. An existing cap, put in place in 1994, put a cap of 10 percent on the share of insured deposits that can be held by any one bank. That cap would be expanded, officials said, to include liabilities other than deposits."