Banks facing $19bn levy as stringent new rules hit Wall Street
American banks will be hit by a surprise $19bn (€15bn) levy as part of a sweeping overhaul of the rules overseeing Wall Street -- described as the toughest since the 1930s Great Depression.
President Barack Obama declared victory for his plans after congressional negotiators reached a dawn agreement on the compromise legislation.
The last impediment to the bill proved to be a proposal to force banks to spin off their lucrative derivatives trading business.
Under the compromise agreement, banks would spin off only their riskiest derivatives trades. They can keep some of their lucrative business based on trades in derivatives related to interest rates, foreign exchange, gold and silver.
They could even arrange credit default swaps, the notorious instruments blamed for the meltdown, so long as they were traded through clearing houses. Banks also would be allowed to trade in derivatives with their own money to hedge against market fluctuations.
The bill would set up a warning system for financial risks, create a powerful consumer financial protection bureau to police lending, force large-failing firms to liquidate, and also set new rules for financial instruments that have been largely unregulated.