The nations largest financial institutions will be hurt by this proposal which includes the names of Goldman Sachs, Morgan Stanley and JP Morgan Chase. Already we've seen negative reaction in their stock prices this week.
On another note, Fed Chairman Ben Bernanke position as head of the Federal Reserve bank is in jeopardy. With an angry public over banks bail-outs and the AIG scandal involving the Federal Reserve, being oppose to Bernanke's nomination might win you some political support with the public. However, this move will hurt the financial markets and what’s bad for Wall Street is overwhelmingly bad for Main Street. I don't believe that the president proposal will take effect in the near future and will not include most of his plan. Americans have a significant portion of their wealth tied up in 401Ks, mutual funds and other equity related investments. When voters realize that this proposal will hurt their nest egg public support will mitigate along with the president poll numbers. This may lead to abandoning the initial proposal plan.
Most of the market move this week has been caused by political headlines. Bears have been trying to find reasons to sell the markets and they reason this week. If this correction is to continue I believe we have another 5% down
size.
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