Obama says Financial Sector to Shrink

"How is this going to grow the U.S. Economy to give people jobs?" Syreeta L. McNeal, CPA, JD

On Saturday May 2, 2009, 6:28 pm EDT

WASHINGTON (Reuters) - The financial sector will make up a smaller part of the U.S. economy in the future as new regulations clamp down on "massive risk-taking," President Barack Obama said in an interview published on Saturday.

Obama, whose young administration has spearheaded a raft of reforms in the banking sector as part of efforts to tackle the financial crisis, said the industry's role in the United States would look different at the end of the current recession.

"What I think will change, what I think was an aberration, was a situation where corporate profits in the financial sector were such a heavy part of our overall profitability over the last decade," he said told the New York Times Magazine.

"Part of that has to do with the effects of regulation that will inhibit some of the massive leveraging and the massive risk-taking that had become so common."

Obama said some of the job-seekers who may normally have gone to the financial sector would shift to other areas of the economy, such as engineering.

"Wall Street will remain a big, important part of our economy, just as it was in the '70s and the '80s. It just won't be half of our economy," he said.

"We don't want every single college grad with mathematical aptitude to become a derivatives trader."

The Obama administration in March proposed sweeping reforms to curb risk-taking on Wall Street and close regulatory gaps to prevent the kind of excesses that led to the worst financial crisis since the 1930s Great Depression.

The president said in the interview that better regulation would help restore confidence in the U.S. financial system.

"A more vigorous regulatory regime, I think, will help restore confidence, and you're still going to see a lot of global capital wanting to park itself in the United States," he said.

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http://finance.yahoo.com/news/Obama-says-financial-sector-rb-15110919.html?.v=2