US banks 'may face further reforms'

28 June 2010

Banks in the US may have to deal with further reforms, it has been suggested.

Last week saw the production of a bill including a new $19 billion levy on the industry, as well as a ban on proprietary trading by deposit-taking banks and new conflict of interest regulations.

However, there was relief on Wall Street when proposed measures to restrict banks from investing in hedge funds were altered to allow them to invest up to three per cent of their tier one capital in such investment vehicles.

But now congressional aides are stating that further reform may yet take place, with planned policies possibly set to include the forced sale of some businesses at larger banks, reports the Financial Times.

Neal Wolin, the deputy Treasury secretary, said US banks had no right to complain about the rules introduced so far, especially the $19 billion tax.

"Relative to the amount paid in compensation, in bonuses - and relative to the enormous benefits of having a safer, more stable financial system - the fee is really not a significant burden," he said.

By Gary Cooper

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