WASHINGTON (Reuters) - Conservatives on one side of the Atlantic love President Barack Obama’s bank plan, unveiled on Thursday, but on the other side of the pond, not so much.
The harshly critical response of U.S. Republicans to the president’s proposals to reduce bank risk-taking contrasted sharply with the reaction of UK Conservatives, who praised them.
Republican Study Committee Chairman Tom Price, a congressman from Georgia, blasted Obama, saying “Americans are sick of his big-government solutions ...”
“It is folly to believe that Washington can decide what represents the proper amount of risk in the private sector.”
But George Osborne, finance spokesman for the UK Conservative Party, said, “This is a welcome move by President Obama that accords very much with our thinking.
“I have said consistently that we should look at separating retail banking from activities like large scale propriety trading and that this was best done internationally.”
Obama, a Democrat who just started his second year in office, proposed stricter limits on financial institutions’ risk-taking in a move that sent bank shares tumbling. The president called for rules to prevent banks or financial institutions that own banks from investing in, owning or sponsoring a hedge fund or private equity fund.
He also called for a new cap on the size of banks in relation to the overall financial sector and limiting banks’ proprietary trading unrelated to serving customers.
The Republicans and the Tories don’t always agree, of course. But both are in opposition and both generally hew to free-market philosophies, as opposed to the generally more interventionist approaches of U.S. Democrats and Britain’s Labour Party.
But on bank regulation, the politically conservative parties of the United States and Britain could not be further apart.
Osborne said there was an emerging world consensus on forcing banks to separate retail and proprietary divisions.
He is expected to be the next finance minister if his party beats Prime Minister Gordon Brown’s ruling Labour Party. Polls put the Conservatives 10 percentage points ahead of Labour.
In the United States, House Republican Whip Eric Canter said Obama’s plan would “penalize America’s financial institutions ... (and) only create more uncertainty in the economy.”
Additional reporting by Peter Griffiths in London; Editing by Andrew Hay