Geithner has reservations on US bank limits-sources

WASHINGTON/NEW YORK Jan 21 (Reuters) - President Barack Obama's newest Wall Street crackdown was met with hesitation from Treasury Secretary Timothy Geithner, who is concerned that politics could be sacrificing good economic policy, according to financial industry sources.

Geithner is concerned that the proposed limits on big banks' trading and size could impact U.S. firms' global competitiveness, the sources said, speaking anonymously because Geithner has not spoken publicly about his reservations.

He also has concerns that the limits do not necessarily get at the heart of the problems and excesses that fueled the recent financial meltdown, the sources said.

The Treasury did not respond to requests for comment.

Obama's proposals would prevent banks or financial institutions that own banks from investing in, owning or sponsoring a hedge fund or private equity fund.

Obama called for a new cap on the size of banks in relation to the overall financial sector that would take into account not only bank deposits, which are already capped, but also liabilities and other non-deposit funding sources. (Reporting by Karey Wutkowski in Washington and Steve Eder in New York; Editing by Dan Grebler)