Global markets in decline after Obama proposals

US President Barack Obama is proposing a severe crackdown on financial institutions in the US which has sent stock markets around the globe into decline.

Yesterday, the Dow Jones closed down 2% - its worst decline since October, while Japan’s Nikkei lost 3.6% - the biggest weekly loss in three months and closing a three-week low.

Hong Kong’s Hang Seng Index fell 2%, while London’s FTSE 100 fell 85.70 points following the announcement yesterday.

The FTSE also opened 20.8 points lower today but recovered slightly, up 3.4 points to 5,338.61.

The US President is planning to curb the activities of the biggest banks in the US and clamp down on risky deals.

Mr Obama said: “If these folks want a fight, it’s a fight I’m ready to have.

“Never again will the American taxpayer be held hostage by a bank that is too big to fail,” he added.

“While the financial system is far stronger today than it was one year ago, it is still operating under the exact same rules that led to its near collapse,” added the President.

It is being described as the biggest regulatory crackdown on financial institutions since the 1930s.

The proposals come after public outrage at banks, which continue to pay hefty bonuses despite Government bailouts.

In the UK, City Minister Lord Myners said the US proposals were “very much in accordance with the direction we have been setting”.

UK Chancellor, Alistair Darling, has implemented a super tax which is designed to claw back some of the bailout funds used to rescue the UK banking industry.

However, London Mayor, Boris Johnson, HSBC chief executive, Michael Geoghegan, and Barclays chief executive, John Varley, have all warned that super tax threatens the reputation of London as a global financial centre.

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