Washington has backed down on proposals to stop investment banks from involving in proprietary trading avtivities.
Though Mr Obama initially appeared to take a tough stance on the Wall Street banks and said that he would ban them from proprietary trading and investing in hedge funds, it is believed that the White House has been forced to reconsider its proposals amid fears that they would be blocked by the Senate. The Democrats have only a slim majority n the Senate, which is expected to be narrowed or eliminated in mid-term congressional elections in November.
It is said that Washington agreed that regulators on both sides of the Atlantic would “track” the proprietary trading activities of investment banks. If they were seen to be taking positions that were not required to satisfy a client request, a hefty capital requirement would be applied to the bank.