The Volcker-Obama plan is the best answer to the crisis

Proxinvest has since a decade advocated for a return to the 1933 Glass-Steagall Act as a solution to the defaults of our global financial system. Such a reform would force banks to split their businesses from their basic protected business of credit and deposit. The legitimate monopoly of credit and deposit suggests the need for a legal prohibition of any other business commitment by real banks, such as investment banking, insurance, private equity, asset management and the likes. Felix Rohatyn, Michel Rocard and many seasoned financiers recently supported the same idea, as well as the Euroshareholders association. On Janurary 21st 2010, President Obama - supported by former Fed Chairman Paul Volcker - highlighted a proposed rule prohibiting commercial banks from owning, investing in speculative assets or funding hedge funds or private equity firms. Afterward, the UK opposition Conservative Party also welcomed the separation of retail banking from large-scale proprietary trading. Proxinvesr suggested ICGN and the French AFG as advocate of institutional investors community should call for a serious splitting of financial industries worldwide.

Read hereunder the excellent speach of Mr Obama !

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PS January 21, 2010 White House - Remarks by the President Barack Obama on Financial Reform Extracts :

First, we should no longer allow banks to stray too far from their central mission of serving their customers. In recent years, too many financial firms have put taxpayer money at risk by operating hedge funds and private equity funds and making riskier investments to reap a quick reward. And these firms have taken these risks while benefiting from special financial privileges that are reserved only for banks./Our government provides deposit insurance and other safeguards and guarantees to firms that operate banks. We do so because a stable and reliable banking system promotes sustained growth, and because we learned how dangerous the failure of that system can be during the Great Depression.

But these privileges were not created to bestow banks operating hedge funds or private equity funds with an unfair advantage. When banks benefit from the safety net that taxpayers provide –- which includes lower-cost capital –- it is not appropriate for them to turn around and use that cheap money to trade for profit. And that is especially true when this kind of trading often puts banks in direct conflict with their customers' interests.

The fact is, these kinds of trading operations can create enormous and costly risks, endangering the entire bank if things go wrong. We simply cannot accept a system in which hedge funds or private equity firms inside banks can place huge, risky bets that are subsidized by taxpayers and that could pose a conflict of interest. And we cannot accept a system in which shareholders make money on these operations if the bank wins but taxpayers foot the bill if the bank loses. It's for these reasons that I'm proposing a simple and common-sense reform, which we're calling the "Volcker Rule" -- after this tall guy behind me. Banks will no longer be allowed to own, invest, or sponsor hedge funds, private equity funds, or proprietary trading operations for their own profit, unrelated to serving their customers. If financial firms want to trade for profit, that's something they're free to do. Indeed, doing so –- responsibly –- is a good thing for the markets and the economy. But these firms should not be allowed to run these hedge funds and private equities funds while running a bank backed by the American people./