Europe Applauds Bank Crackdown; Markets Swoon

Bank shares hit hard by pledge to curb risk-taking
By Rob Quinn,  Newser Staff
Posted Jan 22, 2010 5:45 AM CST
Europe Applauds Bank Crackdown; Markets Swoon
A man walks past an electronic stock board of a securities firm in Tokyo today.    (AP Photo/Koji Sasahara)

(Newser) – European leaders today lauded President Obama's plan to limit the size and risk-taking of the nation's banks, but stock markets worldwide were rattled. Asian markets fell sharply today and European markets opened down, following a 213 point drop in the Dow yesterday, its biggest 2-day loss since March. Europeans said they'll seek an international agreement to avoid competing bank policies that, aiming to shore up stability, would put one country at a disadvantage.

Bankers fear the proposal, which would prevent commercial banks from running hedge funds and private equity firms, and separate commercial and investment banking within the big firms, will mean an end to huge profits in the financial sector, the Times of London reports. "It's like a child who is being told not to do something," the editor-in-chief of the Stock Trader's Almanac tells BusinessWeek. "'Don't take my toy away'—that's a natural reaction." (Read more Glass-Steagall Act stories.)

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