President Obama's remarks on financial industry reform are included in this latest update.
) -- 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.
Bank of America
lost 4.9% to $16.59;
was off 3.8% to $3.33;
fell 5.3% to $41.11; and
slipped 0.8% to $27.60.
Also down were
, whose shares fell nearly 4.5% to $160.25 as it also reported its fourth-quarter results before the opening bell, topping Wall Street's profit view but coming in a tad shy on revenue; and
which gave back 5.1% to $29.07 in recent trades.
Chairman Paul Volcker, an Obama adviser, has championed restrictions on the proprietary trading done by commercial banks, limiting the ways they bet with their own capital. Administration officials said they want to ensure banks don't indirectly subsidize "speculative" trading through other subsidiaries that hold federally insured deposits,
The Wall Street Journal
reported early Thursday.
-- Written by Joseph Woelfel, Michael Baron and Michael Gannon in New York.
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Gannon joined TheStreet.com in March 2007, after spending more than six years as a reporter and editor for The Journal News in Westchester County, N.Y., most recently as an assistant metro editor. He earlier covered several political and government beats as a reporter, including the city of Yonkers. Earlier in his career, he covered venture capital, private equity and the IPO market for Thomson Financial?s Venture Capital Journal and advertising for Sales-Fax, a small, independent trade weekly. He earned a B.A. in history from the College of the Holy Cross and an M.S. in journalism from Northwestern University?s Medill School.