Just Call These New Rules 'The Lloyd Blankfein Act'

Part of Obama's proposed regulations are aimed at Goldman and its CEO
By Nick McMaster,  Newser Staff
Posted Jan 21, 2010 5:43 PM CST
Goldman Sachs Group, Inc. Chairman and Chief Executive Officer Lloyd Blankfein testifies on Capitol Hill in Washington, Wednesday, Jan. 13, 2010.   (AP Photo/Pablo Martinez Monsivais)
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(Newser) – One part of the new financial regulations proposed by President Obama today could be called the "Lloyd Blankfein Act" because it's aimed squarely at Goldman Sachs and its "unrepentant CEO," writes Daniel Gross. The proposal would prevent banks from taking FDIC-insured deposits and then doing "funky algorithmic trading." As one administration official puts it, "You can choose to engage in proprietary trading, or you can choose to own a bank. You have to make the basic choice."

"Should the proposal go through, it will force some banks to close down or sell off certain units," Gross writes at Slate. "The more likely—and most desired—response would be for Goldman and Morgan to give up their bank holding company status and go back to obtaining their funding from the market. The higher cost of capital and challenge of raising funds will make it harder for them to be so big. That's the point."

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