Tags: john | bogle | obama | bank

Bogle: Banks Will Find Way Around Obama Rules

By    |   Friday, 29 Jan 2010 10:42 AM

President Obama’s new bank regulation plan is unlikely to solve the industry’s woes, says John Bogle, the legendary founder of Vanguard mutual funds.

The proposal seeks to solve the "too big to fail problem" by limiting banks’ size and preventing them from owning private equity and hedge funds.

But banks will figure out ways to evade the new rules, Bogle says.

“I am somewhat skeptical about how much the federal government can actually regulate,” he told The New York Times.

“We need to try, but all the lawyers and geniuses on Wall Street are going to figure out ways to get around everything.”

Even some in the Obama administration apparently agree with Bogle.

White House adviser Paul Volcker supports the plan and part of it was named after him.

But Obama’s top economic adviser Larry Summers and Treasury Secretary Tim Geithner reportedly oppose it.

So far, the stock market has sided with Summers and Geithner.

The Standard & Poor’s 500 Index has dropped 5 percent in the last week.

"Obama scared everybody," stock trader Todd Leone at Cowen & Co. told The Wall Street Journal.

Renowned bank analyst Dick Bove told CNBC that the bank plan may send the market into a tailspin. That’s because it will limit the ability of banks to generate money — money that has been used to purchase stocks, he says.

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President Obama s new bank regulation plan is unlikely to solve the industry s woes, says John Bogle, the legendary founder of Vanguard mutual funds. The proposal seeks to solve the too big to fail problem by limiting banks size and preventing them from owning private...
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2010-42-29
Friday, 29 Jan 2010 10:42 AM
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