Are we witnessing the emergence of Obama II, the man of the masses, the man who will cease listening to Wall Street types like Larry Summers and Tim Geithner? Two days after witnessing his party get clobbered in Massachusetts, Obama II came out swinging. He made clear there will be legislation that prevents banks from taking risky bets with their own capital to make money on financial markets. They not only will not be allowed to make such bets, but to run hedge funds or make private equity investments through what is called the “Volcker rule.” He wants to prevent further consolidation of the financial system and ban takeovers and mergers among American firms in the financial sector.
The Dow Jones went down about 190 points on news the president was finally going to behave as president of the United States rather than president of Wall Street. Finally, he made reference to how Bush got us into the mess. Obama is expected to push for higher taxes on financial institutions. Of course, it remains unclear whether Wall Street types can actually live on incomes under a billion of year.