Europe welcomes Obama bank plan, won't imitate it
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By Keith Weir and Crispian Balmer Keith Weir And Crispian Balmer – Fri Jan 22, 2:20 pm ET
LONDON/PARIS (Reuters) – Major European economies offered support on Friday for U.S. President Barack Obama's plan to limit banks' size and trading activities but indicated they had no plans to follow suit.
Obama's dramatic proposals could rewrite the world financial order but experts said they were light on detail and could cloud the global approach fostered by the Group of 20 nations.
The European Union will not imitate Obama's plan, because it aims to reduce risk in the sector through other means, an EU source said on Friday.
"Look, we understand the U.S. position and we understand his reasons. But I can't see the EU going down this route," the source, who is close to EU financial policymaking, told Reuters.
"The U.S. finds itself a little behind us on this. The Obama plan is not fit for the purpose in the EU."
Obama made his proposals on Thursday, saying he was ready to fight resistance from Wall Street banks he blamed for helping cause the global financial crisis.
The plan would prevent banks from investing in, owning or sponsoring a hedge fund or private equity fund.
It would set a new limit on banks' size in relation to the overall financial sector and, perhaps most dramatically, could also bar institutions from proprietary trading operations, which are unrelated to serving customers, for their own profit.
Proprietary trading involves firms making bets on markets with their own money and has been the source of much of banks' bumper profits before and after the financial crisis.
French Economy Minister Christine Lagarde welcomed the proposal, saying it was a "very, very good step forward."