Trying to End Too Big to Fail

Administration officials tell the Wall Street Journal and New York Times that President Barack Obama plans to roll out a series of new regulations aimed at limiting the size and risk of big banks.

The proposals are clearly aimed at ending the phenomenon of having banks too big to fail for fear of such failure collapsing the economy. It was that fear that led to the immensely unpopular Troubled Asset Relief Program to bail out the biggest banks after the 2008 Lehman Brothers collapse.

Obama’s proposals, the Wall Street Journal reports, also represents a rollback of some of the deregulation that has taken place in financial markets over the past two decades and a return to some of the Depression-era mentality of regulating banks.

The approach has been backed by Obama economic adviser and former Federal Reserve Chairman Paul Volcker, the Times reports. Obama plans to work closely with House and Senate leaders to include the limits in any financial regulation that emerges in coming months.

Obama is expected to speak more about the proposed regulations at the White House today.

The move comes as the president’s popularity wanes because of high unemployment and the bailouts the federal government began under the Bush administration that have continued into the Obama administration.

As his popularity has waned, the president has increased the fieriness of his anti-Wall Street rhetoric. Most recently, such rhetoric was on display at appearances he made on behalf of Martha Coakley, the Massachusetts attorney general who was defeated by Republican Scott Brown to succeed Edward Kennedy in the U.S. Senate.