Obama presses Wall Street in renewed regulatory reform push (2)

08:30, April 23, 2010      

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Obama said the bill would create a way to protect the financial system, the broader economy, and taxpayers in the event that a large financial firm begins to fail.

Obama pointed out that there currently is no process designed to contain the failure of a Lehman Brothers or any of the largest and most interconnected financial firms, and a system is needed to shut these firms down with the least amount of collateral damage to innocent people and businesses.

To tackle this issue, Obama said, the financial regulation reform bill would enact the Volcker Rule, which places some limits on the size of banks and the kinds of risks that banking institutions can take.

In January Obama proposed to bar banks from owning, investing in or sponsoring hedge funds or private equity funds.

In addressing the financial regulation loopholes, Obama again criticized the derivatives as "financial weapons of mass destruction," citing renowned investor Warren Buffett.

"That's why these reforms are designed to respect legitimate activities but prevent reckless risk taking. And that's why we want to ensure that financial products like standardized derivatives are traded in the open, in full view of businesses, investors, and those charged with oversight," he said.

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