RRJ#1Obama Seeks Limits on Banks, Condemns Campaign Finance Ruling

Obama Seeks Limits on Banks, Condemns Campaign Finance Ruling

Reference:

Ritter, M. (2010, January22) “Obama seeks limits on banks, condemns campaign finance ruling” VOA Special English. http://www.voanews.com/specialenglish/2010-01-21-voa1.cfm

Summary:

President Obama is trying to help banks and their system by issuing laws or rules to save them from investment dangers by using government-insured deposits. As a result of taking big wastage the banks traded mortgage securities, which affect badly on the bank system.

The President’s declaration guided the bank shares to go down. That reason made financial companies and some members in Congress refuse Obama’s fixing steps. There are some senators, in Congress, such as Scott Brown, who disagree with health insurance system; he will affect the financial system.

The United States Supreme Court has explained the way to use it to get more votes than they need. That made President Obama think that is a “major victory” for big oil companies in Wall Street and other corporations, he recommended them his administration talk with congressional leaders to make a forceful reaction.

Unemployment increased a couple times in two years to 10%; many people waited for the government to save the large banks. Therefore, there are banks that earned record profits, at the same time the others lost their money.

Reaction:

In my opinion there are many factors that affect the banks functions such as money supply, interest rates and demand of the money, and there are other factors, but these are the most important aspects. The central bank’s occupation is determining the right quantity of the money that the system needs. Also, the commercial banks can change the interest rates. In terms of the demand of money, the public will decide that.

On the other hand, the investments is one part of the parts that the economy depends on with other parts such as the saving and expending; these parts influence the economy working together, so if there is any problem in one’s part of them, that will affect the others. The important thing that needs to be mentioned here is, that there are features at work with each part; in this case government-insured deposits affect the banks job indirectly, that made President Obama worry about that.

The other object here is that the unemployment has increased during two years reaching to 10%; that sign is dangerous on any previous economy while the US economy .It was 9.7% in the US in 2009 according to Wikipedia. The normal unemployment rate is between 5.5 and 6. That is exactable for a normal case; if that increased it is the big sign of the economic problem. That will influence some banks by earning and others by losing.