Jan 22

Barack Obama made a proposal about tighter bank restriction yesterday, aiming to stabilize the financial market. Now let’s see how America response to his nation-widely discussed proposal today.

Ever since the announcement of the proposal,financial institutions have been experiencing a huge decline in stock price, especially Citigroup, which lost 2.635% yesterday and loss another 3.67% today. Experts believe that people have over-reacted with the proposal. People do not need to be panic, after all it is just a proposal and it still has a long way to go to be written into law. What’s more, such a timely regulation is just what America need.

As I mentioned in my last paper, the positive side believe that the high-risk investment commercial banks has made is using the taxpayers’ money to engage into reckless speculation. That is irresponsible for the taxpayers who save their money in the bank, putting the savings from the taxpayers and even the whole society in danger to pursue their own profit. As the banks went into crisis, it, in turn, uses the money from taxpayers again to survive. That’s unfair for the savers. What’s more, if the commercial banks keep on doing so, they may drive the American Economy into an abyss again.

However, the negative side have their own opinion.The core dispute is that his proposal has not reached the core of the creation of crisis. The crisis was not caused by the high-risk financial actions of the commercial banks, but mostly the bad house loans they made and the churning transactions made by investment banks. Punishing a system you want to heal, however, the punishment would not cure the root cause of trouble; it is not hard to understand why this proposal is highly criticized.

Personally,I would rather regard the proposal as another trick played by Obama Administration’s to win popularity.All his ideas sound perfect, but few act so. Obama Administration is suffering from the largest decline in support rate after his first year in White house in American history. His stimulus plan has not reached its expectation, and American Economy still has mo positive signal heading to recovery. Obama is trying to ease those ordinary people by cutting the profit of an industry which originally caused the crisis.

No matter what, it is obvious that Obama’s proposal has tremendously affected not only the banks but the whole society. Theories could only judged by truth. Let’s wait and see what is going on?