US President Barack Obama has proposed limits to the size of banks to try to prevent future financial crises.

“Never again will the American taxpayer be held hostage by banks that are too big to fail,” Mr Obama said.

He recently announced a $117bn (£72bn) levy on banks to recoup money US taxpayers spent bailing out the banks.

US stocks – especially banks such as JPMorgan Chase and Bank of America – fell sharply as Mr Obama announced the sweeping new rules.

His proposals also include limits on the amount of risk banks can take, and banning retail banks from using their own money into risky financial transactions.

That prevents commercial banks from investing in hedge funds, private equity funds or engaging in so-called proprietary trading. Source: BBC.

At last some proposals which might actually prevent a recurrence of the recent banking crisis – however expect the banks to start using their financial muscle to persuade congress to water down Obama’s proposals. Now will Gordon Brown propose the same for our banks?