Obama threatens fight with banks on new risk rules

US President Barack Obama threatened to fight Wall Street banks on Thursday with a new proposal to limit financial risk taking, sending stocks and the dollar tumbling.

Obama, a Democrat who is struggling to advance his agenda after a key election loss this week, laid out rules to restrict some banks' most lucrative operations, which he blamed for helping to cause the financial crisis.

"If these folks want a fight, it's a fight I'm ready to have," Obama told reporters at the White House, flanked by his top economic advisers and lawmakers.

"We should no longer allow banks to stray too far from their central mission of serving their customers," he said.

Financial sources said Treasury Secretary Timothy Geithner had hesitations about the proposals, concerned that good economic policy was being sacrificed for politics.

But a White House official said the plan had the unanimous backing of Obama's economic team.

"We should no longer allow banks to stray too far from their central mission of serving their customers," Obama said.

After a mixed first year as president, Obama took a tough, populist-tinged stance aimed at revving up his political base by exploiting anger over Wall Street excess.

The proposals, which require congressional approval, would prevent banks or financial institutions that own banks from investing in, owning or sponsoring a hedge fund or private equity fund. Washington, Friday, Reuters