Finance Space

Banks would be barred from high-risk speculative trading under a measure that has an “extremely good” chance of becoming law, Democratic U.S. Senator Carl Levin said on Monday.

The measure also would require large nonbank institutions to set aside additional capital to cover the risks of speculative activity, and prohibit financial firms from betting against their customers.

It would toughen a sweeping rewrite of financial regulations currently being debated in the Senate.

Levin and fellow Democratic Senator Jeff Merkley said their proposal has wide support among Democrats, in particular Banking Committee Chairman Christopher Dodd, who is overseeing the legislation.

U.S. President Barack Obama accused opposition Republicans on Saturday of spreading misinformation about a Democratic bill that aims to tighten oversight of Wall Street banks and their practices.

With debate heating up in Washington about reforming the financial rules, regulators charged Wall Street giant Goldman Sachs with fraud on Friday.

Bank shares and the broader stock market fell on fears the civil lawsuit could make it more difficult for the financial industry to ward off reform.

After successfully shepherding his healthcare overhaul through Congress, Obama is pushing for victory on the financial regulatory reforms – a popular issue with voters in the run-up to congressional elections in November after a financial meltdown sparked the worst U.S. recession in decades.

Americans are about evenly divided on the merits of giving the federal government new powers to regulate large banks and major financial institutions; however, they offer greater support when the issue is more specifically framed as regulating “Wall Street banks.”

When Wall Street is not mentioned, net public support (percentage in favor minus percentage opposed) for banking reform legislation is +3 points, but when it is mentioned, net support is +14.

Gallup measured support for enhanced federal regulation of banking using both wordings in its April 17-18 Daily tracking. A random half-sample of respondents was asked the “Wall Street” wording; the other half was asked about banks and major financial institutions, generally.

Bank of America may finally be returning to health.

The bank, which is often considered a bellwether for the American economy, said Friday morning that it clawed back to profitability in the first quarter after two consecutive periods of losses.

It had been battered over the last year by huge losses in consumer loans and a costly merger with Merrill Lynch that sank its share price.

Surprisingly, perhaps, profit from Merrill Lynch, the bank’s much-maligned brokerage firm, has helped to offset continued losses from consumer loans, though those losses also narrowed.

Federal Reserve Chairman Ben Bernanke on Thursday offered one of his most aggressive defenses of the central bank’s role in the future of bank supervision in response to a question from Sen. Richard Shelby (R., Ala.) during an appearance on the Senate Banking Committee.

Here’s his response to a question about why the Fed should be the top cop for large financial companies:

“I think that stripping the Federal Reserve of supervisory authorities in the light of the recent crisis would be a grave mistake for several reasons.

European banks rallied on hopes of a possible rescue plan for Greece, as officials in Berlin moved closer to constructing a “firewall” to prevent the debt crisis spiralling out of control.

Eurozone economies were keen to stop any excessive flight out of Greek stocks that could hit the country’s banks, as the negative feeling would inevitably spread to institutions elsewhere in the region.

Following is a reformatted version of the White House transcript released today of President Barack Obama’s remarks calling for restrictions on the size and scope of financial institutions:

Good morning, everybody. I just had a very productive meeting with two members of my Economic Recovery Advisory Board: Paul Volcker, who’s the former chair of the Federal Reserve Board; and Bill Donaldson, previously the head of the SEC. And I deeply appreciate the counsel of these two leaders and the board that they’ve offered as we have dealt with a broad array of very difficult economic challenges.

Bank of America Corp., the nation’s second-largest bank, said David Flannery is joining the company as global head of leveraged finance, starting in November.

Flannery had the same title at Deutsche Bank AG, where he has worked since 1992, according to a statement today from Charlotte, North Carolina-based Bank of America. He will report to Bruce Thompson, head of global capital markets, the bank said.

Chief Executive Officer Kenneth Lewis is expanding the corporate and investment bank, affirming his commitment to the unit after losses last year triggered a management shakeup and 650 job cuts. The unit’s profit grew 3.2 percent in the second quarter and writedowns on securities fell to $645 million from $1.47 billion in the first quarter.