Obama to propose size limits for banks

President Barack Obama will today propose new limits on the size of US banks after spending billions of tax-payer dollars to bail out "to-big-to-fail" firms, a senior official said.

The measures would place sweeping new restrictions on a sector seen as responsible for sparking the largest recession since the Great Depression of the 1930s.

"A couple of months ago the president began discussing with his economic team the need to include in financial reform more specific and stronger provisions to limit the size and scope of financial institutions" the official told AFP.

The proposals aim "to cut down on excessive risk taking" among the largest banks, after crises at a handful of the largest firms threatened to choke the flow of cash to the US economy.

"Today the president will announce a series of measures that address size and scope" of the institutions the official said.

Obama's first year in office was dominated by efforts to rescue banks that were exposed to massive loses on the sub-prime mortgage market.

The official, who asked not to be named, said the new measures would limit banks' ability to use their own cash to buy such financial instruments, so-called proprietary trading.