USA: Banks in full uncertainty

Following the proposals made by Barack Obama in order to limit both the size of banks and their risk-taking, the banking and financial markets have reacted badly. In exchange, the bank shares continued to tumble yesterday began to regard the U.S. markets. Do not panic however, as the project of U.S. President does not imply that the industry feared most: a dismantling of the largest U.S. banks. However, fear of an escalation, particularly during the passage of these proposals to Congress was clear Friday.

Eager to appear aggressive towards large banks unpopular elected officials of both parties could, for example, insist on a return to the previous rules in 1999, prohibiting commercial banks from entering the market trades.This would lead to force a breakdown of major banking groups like Bank of America-Merrill Lynch, Citigroup and JPMorgan Chase.

This is not the will of the White House. But Republican John McCain and his Democratic colleague Maria Cantwell nevertheless, for several days, submitted a proposal to that effect. "It seems that many proposals of President Obama going in the right direction," said former Republican candidate for the presidency. "Let's try to solve problems," commented his hand to his Republican colleague from Arizona, Jon Kyl."Do not seek a scapegoat that diverts attention from the mistakes of this administration," stated the curator.

New Principles

The Democratic chairman of the Committee on Financial Services of the House of Representatives, Barney Frank is aware of the danger of an escalation to develop free business cards . While he endorses the new principles set by Barack Obama, seven months after the introduction of the reform project finance. But he said he is not totally prohibit the "own-account trading 'of the banks.

While banks such as JPMorgan Chase and Goldman Sachs would be proposed by the White House forced to get rid of some of their activities in the capital and to abandon some of their own trading account.But Barney Frank said, "it would be wrong to demand that banks are withdrawing quickly from all hedge funds and private equity funds involved." The influential Democrat feared the consequences of massive sales made in an emergency.

Tim Geithner, Treasury Secretary, has lost influence in the White House in this case. He was dismissed in June, the approach taken today by Barack Obama to reform Wall Street. He feared that it unnecessarily complicates the debate. Before a group of bankers, closed Thursday night, he confirmed his reservations. Geithner seems to feel that the activities listed are not those who most leaden banks.

The immediate fate of the reform is in the Senate. Other more fundamental questions remain to be resolved.Within both parties, Senators remain divided, for example, on the same principle to let the Fed any role in banking regulation.

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