Obama Proposes Limits on Wall Street Banks; Enough to Ease Main Street Anger?

Bank of America said there is "need for substantial regulatory reform to ensure that unregulated activities not be allowed to contribute to future crises." It said that, since the financial crisis occurred, it has reduced its risks by ending or limiting certain products and activities, including derivatives and private equity investments. But the bank stopped short of offering any reaction to the president's proposal, saying only that it would look at it carefully when its details became available.

Representatives of Goldman Sachs and JPMorgan Chase said the banking giants had no comment on the president's announcement.

The president's proposal has to make its way through Congress and, if the sluggish pace of financial regulatory reform is any indication, it could be some time before these measures become reality, if they ever do.

In recent months the financial industry has been waging a fierce battle with lawmakers to push back against the administration's regulatory reform effort, slowing momentum on Capitol Hill.

While the House of Representatives passed a measure late last year, the Senate has yet to get its bill out of committee.

Despite the challenges ahead for the administration's reform effort, the White House clearly feels the need to rein in Wall Street's excesses amidst an ongoing backlash from Main Street.

In an interview Wednesday with ABC's George Stephanopoulos, Obama said he was well aware of the general public's frustrations with the $787 billion bailout of the financial system, a program initiated by the Bush administration and then continued by the Obama regime.

"It was the right thing to do for us to salvage the financial system and I make no apologies for that," the president said. "But we knew at the time how politically toxic that was. What it gave people a sense of is, 'We're spending all this money, but I'm not getting any help.'"

Last week the White House unveiled plans to impose a fee on about 50 of the nation's biggest banks with assets of $50 billion or more, an attempt to recoup around $90 billion of taxpayers' money.

Still, the president conceded, the bank tax will do little to ease the anger on Main Street. The public sees Wall Street booming once again while the country's unemployment rate remains at 10 percent.

"It doesn't eliminate the sense that their voices aren't heard and that institutions are betraying them," Obama told Stephanopoulos, "and I think that's been expressing itself all year. And they've gotten increasingly frustrated over the course of the year."

Wall Street, meanwhile, has made a public effort to acknowledge Main Street's frustrations, but privately the banks are fighting the administration's crackdown.

The Securities Industry & Financial Markets Association, the main lobbying group for Wall Street, hired a top Supreme Court litigator to look into possibly mounting a legal fight against the president's proposed bank tax on the grounds that it would be unconstitutional by singling out the country's biggest banks.

Banks Take Conciliatory Steps

Publicly, though, the banking titans have taken steps to show they have been chastened by their role in the country's economic collapse.

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