Last week, a combative President Obama announced his financial reform proposal, a move that will impose new restrictions on big banks and may signal an abrupt change to the way that federal regulations are applied to Wall Street.
Obama stated that large financial institutions almost destroyed the U.S. economy, because they took "huge, reckless risks in pursuit of quick profits and massive bonuses," according to Politico.com.
The president proposed to limit the size and scope of financial firms by restricting them from making "risky" investments. His plan will also ban banks that take deposits from trading stocks for their own profit, a change that would separate commercial banks from investment banks, Newsmax reports.
"Proposals to preemptively break up large, well-managed and well-capitalized banking companies are based on a misdiagnosis of the causes of the financial crisis," said Rob Nichols, president of the Financial Services Forum, quoted by the news source.
The stock market went into a tailspin last week following Obama’s announcement, with the Dow Jones industrial average losing over 200 points.
The president’s new regulations come on the heels of last week’s announcement that a "responsibility fee" would be applied to large financial institutions to recoup the $117 billion spent on government bailouts.