Monday, January 25, 2010

Treasury Department And Banks Have No Idea What The New Obama Bank Rules Mean

By John Carney

The Treasury Department has been scrambling to figure out what to say about the new proposals unveiled by Barack Obama last week limiting the size and scope of banks.

The proposals came out of the White House rather than the Treasury Department. Inside of Treasury there is the feeling that the basis of the plan came from “political people” instead of “economic policy experts,” according to a person familiar with the matter.

The Treasury Department has been fielding questions from bankers and journalists about the new regulations—but so far has not been able or willing to provide much information. Calls and emails to a Treasury Department spokesperson went unanswered this week and last week.

Privately, Treasury Department policy people express frustration at the process. Some believe that if the White House had not been in a rush to present the new policy following the Massachusetts election, a more fully detailed policy could have been presented. There is a growing feeling of resentment that the process was speeded up for political reasons.

“This all came out of the White House. We look like idiots because of this. And we can’t get the White House to provide the clarity banks, shareholders and the American people deserve,” a Treasury Department employee said.

Bank executives are becoming increasingly frustrated because they have been unable to get clarification about how their business will be affected by the new rules. Some anticipate very little change, arguing that nearly all of their business—including proprietary trading and running hedge funds—is related to serving customers.

Others are wary that this kind of thinking may underestimate the Obama Administration’s populist turn.

“If we try to jump through loopholes on this, we might find its actually a noose,” a person at one of the largest banks told us.

Read the rest of the article here.

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