Obama Seeks to Limit the Size of Banks

President Obama's remarks on financial industry reform are included in this latest update.

WASHINGTON (TheStreet) -- President Barack Obama on Thursday made a renewed push for financial industry reform, pledging to address the risky trading practices and the massive size of the nation's largest banks that he believes led to the economic crisis from which the nation is still emerging.

Obama said his administration would work with Congress to ensure that any financial institution that contains a bank does not "own, invest or sponsor" a hedge fund, private equity fund or proprietary trading desk "unrelated to serving customers." The president also said he would work to limit consolidation in the banking industry, which some believe has made certain institutions "too big to fail."

Obama made his remarks as many of those same institutions post strong fourth-quarter profits, driven by trading activities.

"While the financial system is far stronger today than it was a year one year ago, it is still operating under the exact same rules that led to its near collapse," Obama said. "My resolve to reform the system is only strengthened when I see a return to old practices at some of the very firms fighting reform; and when I see record profits at some of the very firms claiming that they cannot lend more to small business, cannot keep credit card rates low, and cannot refund taxpayers for the bailout. It is exactly this kind of irresponsibility that makes clear reform is necessary."

A selloff in the big banks, which started after news reports about the expected speech came out earlier in the day, accelerated after Obama spoke.