Blood and Water = Politics and Finance

Obama ran on the ticket of change. Change of what; many still do not know. Originally he was aiming for healthcare now it seems our president is giving up that fight and listening to the clamoring of the uneducated mob that is the American public. The financial downturn undoubtedly was caused by the financial institutions it most directly effected, but without those very same financial institutions we would not have been able to climb out of that very same hole. President Obama is a politician, and like all politicians is concerned with his party’s ticket. The public is calling for change to a pecuniary system that they have little or no understanding of. For once, our leader is listening, and for once I wish he didn’t.
Obama has just announced a plan that is aimed at appeasing the American public. This plan curtails banks ability to make money and thus the American economy’s ability to get out of this rut. Analysts estimate that the proposal could slash earnings as much as 25% at a firm such as Goldman Sachs. The Financial Services Forum, which represents 18 of the country's largest financial institutions, has already begun aggressively lobbying against the plan. Upon hearing the news of this new plan, big-bank stocks tumbled late last week. In the last couple of days, the shares of Goldman Sachs, Morgan Stanley, JPMorgan Chase & Co., and Bank of America Corp. have each lost 10%. This is simply not acceptable. Our countries leaders are supposed to stimulate the economy not impede it.
I believe the worst part of our president’s plan is a ban on commercial banks making trades with their own money -- a practice known as proprietary trading. It is their own money; they should do with it what they please. Researchers at JPMorgan Chase estimated that at just five major banks, this ban could cost $13 billion in 2011. Investment banks' proprietary cash accounts for 9% of the $1.4 trillion invested in U.S. private equity funds and 16% of the $1.1 trillion invested in U.S. hedge funds, according to London-based research firm Preqin Ltd. This is money that the market needs to operate and without it ceases to function properly.
Obama’s plan was made in response to the public’s dissatisfaction with his presidency. It is an attempt to rekindle the fire that got him the job in the first place, and a clearly introduced in a timely manner in response to Republican Scott Brown’s election to Senate. The old saying that blood in water do not mix clearly applies to finance and politics.