Park East Capital, Many regulators are unhappy with Obama’s proposals and are refusing to give in...

President Obama is facing strong opposition against some of the banking regulations that he wants to bring in.

On Tuesday sources close to the situation told Park East Capital that the US administrations plan to reshape the banking sector with new regulations has hit a brick wall. Some regulators are saying that some of the new proposals are not needed and will not help the economy.

Sources told Park East Capital that the US treasury secretary Timothy Geither has told the regulators that they need to get in shape and back the President. Geither had and angry confrontation with the regulators over their lack of support for Obama.

This confrontation does not seem to have much impact on the regulators view on the administrations outline.

One of the sticky points is that Obama wants to create a new agency and getting rid of the comptroller of the currency. Park East Capital sources also said that the OTS was also up for the chop.

The Administrations outline has seen many opponents object, many are saying that in principle they agree that changes need to be made in the banking industry. Many do not want to see a repeat of the last year or so. But they are also saying that any changes should not be made in haste, such as a huge overhaul, which the US administration wants.

Park East Capital senior analysts tend to agree with those that oppose, there needs to be change that is clear but it should evolve from the mistakes we have made, not a huge overhaul.

Sources close to the situation though have indicated to Park East Capital that although the new proposals are tough as they think this was done deliberately by the US administration as it gives them some negotiating leverage. They told Park East Capital to expect to see a compromise in which the US eases its outline to appease the regulators.

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