Financial Regulatory Forum

Obama to target excessive financial risk-taking

By Alister Bull and Karey Wutkowski

WASHINGTON, Jan 20 (Reuters) – President Barack Obama, reeling from an election defeat in the U.S. Senate, will propose stricter limits on financial risk-taking on Thursday in a move that may recall Depression-era curbs on banks.

The president will announce a series of measures to cut down on excessive risk-taking as part of a revamp of the country’s financial regulatory system, a senior Obama official said on Wednesday.

The move could also help the White House tap into public rage over Wall Street excess after Obama’s Democratic Party was rebuffed by voters in Massachusetts, who elected Republican Scott Brown to the U.S. senate.

“The proposal will include size and complexity limits specifically on proprietary trading and the White House will work closely with the House and Senate to work this into legislation,” the official said.

Proprietary trading refers to a firm making bets on financial markets with its own money, rather than executing a trade for a client.

Swiss central banker backs universal bank model – paper

Jan 16 (Reuters) – Switzerland’s two big banks — UBS and Credit Suisse — should not be forced to split their wealth management and commercial banking operations into separate entities, the new head of the country’s central bank said on Saturday.

Philipp Hildebrand, who took over as chairman of the Swiss National Bank at the start of the month, said the universal banking model provided useful synergies for Swiss banks.

Hildebrand has said repeatedly that major Swiss banks need tighter regulation to deal with the “too big to fail” problem.

U.S. Fed’s Hoenig backs bank break-ups where needed

By Mark Felsenthal

ATLANTA, Jan 5 (Reuters) – A top U.S. Federal Reserve official on Tuesday backed stripping banks of risky operations, suggesting growing support for breaking up large firms to prevent excesses that could undermine financial stability.

At a meeting of top economists here, Kansas City Federal Reserve Bank President Thomas Hoenig voiced support for former Fed Chairman Paul Volcker’s recommendation that banks not be allowed to sponsor hedge or equity funds.

However, also like Volcker, Hoenig stopped short of calling for restoration of Glass-Steagall banking laws that barred large banks from affiliating with securities firms and engaging in the insurance business.

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