The president last year proposed a series of measures to tighten the reins on financial institutions, and the House passed a bill last month. His announcement Thursday broadens those measures, particularly by endorsing a proposal by ex-Fed Chairman Paul Volcker to restrict proprietary trading by commercial banks. Such a limit would separate commercial banks from investment banks, a line that was blurred a decade ago by the repeal of the 1930s Depression-era Glass-Steagall Act. Without such regulations, Obama said, the financial system will continue to operate under the same rules that led to its near collapse.
He's just trying to pin the blame where it doesn't belong:
But Wall Street didn't cause the collapse — government did . And this call for tougher rules is yet another attempt to escape blame. All Glass-Steagall did was let bank holding companies buy into investment banks. What undermined the financial system was a fanatical application of rules aimed at getting banks to lend as much money as possible to facilitate homeownership among minorities.The more the government meddles where it doesn't belong, the more trouble we get. As Reagan so aptly put it: Goverment is not the solution; government is the problem.
It was the government, not Wall Street, that created the subprime market by compelling banks to make bad loans and urging Fannie Mae and Freddie Mac to cash out the banks by putting more and more of the toxic mortgages on their balance sheets.