Obama bank plan ‘could be law within months’

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By Patrick Jenkins and Gillian Tett in Davos

President Barack Obama’s proposals to rein in the US banking sector and its practices could be enacted into law within six months, according to a key congressional leader.

Barney Frank, chairman of the House of Representatives finance services committee and a linchpin of White House banking reform efforts, told the Financial Times that the proposals could be incorporated into legislation making its way through Congress.

Mr Frank said he was confident the bill would be in place well before mid-term elections in November.“I think Chris [Dodd, Mr Frank’s counterpart in the Senate] will get a bill out in March,” he said.

The plan unveiled last week was drafted by Paul Volcker, the former Federal Reserve head and chairman of Mr Obama’s Economic Recovery Advisory Board.

“We’ve been working with Paul for most of the [past] year, so I wasn’t surprised [by the proposals],” said Mr Frank. Mr Volcker, previously seen as an “odd man out”, had now been recognised by the administration for the “cogency of his work”, he added.

The twin proposals unveiled by Mr Obama last week would constrain the biggest banks from growing and force them to shed hedge fund, private equity and proprietary trading activities.

Obama bank plan ‘could be law within months’