Markets give thumbs down to Obama's banking sector proposals

Stock markets fell sharply on Thursday in response to president Barack Obama's announcements of plans for introducing far reaching changes to curb the activities of the biggest US banks.

The Dow Jones took a tumble, down 2 per cent, in its worst fall since October, while Japan's Nikkei closed plumbed a three-week low.
Shares of major US banks Goldman Sachs and Bank of America tanked across the board.

Obama, said he was 'ready for a fight' with the banks and has plans to cut them to size. He also intends to impose restrictions on risky trading.

He added that the American taxpayer would never again be held hostage by banks that are ''too big to fail.''

"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," he said. Analysts say Obama's proposals would mean some of the biggest US banks would be broken up.

Obama's plans also include a ban on retail banks using their own money in investments known as proprietary trading. Banks would instead, be limited to investing their customers' funds.