Obama Administration Calls for Tougher Wall Street Rules

President Obama appears to be ramping up his efforts to make substantial reforms to the financial industry largely responsible for the current economic crisis.

Large banks had to be bailed out by the federal government following the collapse of the economy in the fall of 2008 – a move that was very unpopular.  In response to widespread anger at the bailouts, exacerbated by the lavish bonuses that bailed-out banks are paying their employees, Obama announced yesterday that he wanted to limit how big banks can get to prevent them from becoming “too big to fail.”

He also proposed a new rule, called the “Volcker Rule” after its key proponent, former Federal Reserve Chairman Paul Volcker, that would prevent banks from owning, investing in, or sponsoring any operations that are unrelated to their primary function of serving their customers, like hedge funds, private equity funds, and proprietary trading operations.

The proposals come on the heels of Obama’s insistence that any congressional financial reform package include the proposed Consumer Financial Protection Agency.  The Leadership Conference and its consumer rights allies in the Americans for Financial Reform coalition support the proposed agency and are urging Congress to give it strong enforcement powers to protect all consumers.

View Obama’s announcement: