Two controversial proposals to limit the activities of banking organizations and to restrict the size of all financial institutions appear to signal a new tone, substantive approach and urgency in the Obama administration's quest for financial reform. The first proposal, dubbed the Volcker Rule after its principal author, would prohibit banking companies from investing in or sponsoring hedge funds or private-equity funds and from engaging in proprietary trading. The second proposal calls for a cap (at an unspecified level) on the nondeposit liabilities of the largest financial companies.

They have understandably garnered significant attention from the press, policymakers and commentators. At the same time, many have failed to recognize that the Obama proposals form only one part of a broader set of reforms, many of which may affect banking companies and other financial institutions in some of the same ways as the Obama plan. Moreover, these broader reforms may well be enacted in conjunction with the Obama proposals, the combined effect of which should be considered by those assessing the implications.

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