Obama to take tougher line with banks

President Barack Obama on Thursday will propose tough new
rules that would limit the size of the nation’s banks, according to several
media reports.

The move comes after a stunning political defeat for the
president in Massachusetts, where Republican Scott Brown took the seat held for
nearly five decades by the late Sen. Edward Kennedy (D).

Obama is responding to calls for tougher action on banks,
including from some who believe it will help him regain his political footing.

{mosads}Obama told ABC News on Wednesday that he was about to have a
“big fight with the banks.”

The proposals to come Thursday from the White House would also
seek to curb the risk-taking by banks, blamed by many as a cause of last year’s
financial collapse that ushered in the nation’s worst recession in decades.

That recession is helping to crush Democrats politically,
particularly a jobless rate hovering at 10 percent.

Obama last week proposed a new fee that would be imposed on banks
that was designed to cover costs related to the $700 billion bailout of the
financial sector.

That has enraged big banks, which have paid back the money given
by the government. They have noted that General Motors and Chrysler, which were
also bailed out, would not be hit by the fee even though they have not paid
back the government.

Other companies that did not take bailout money would also
be hit by the new fee.