June, 28, 2010

US bank stocks enjoyed a relief rally as uncertainty surrounding the new shape of the financial sector came to a close in the early hours of yesterday morning.The Wall Street reform is tougher than proposed a year ago by the US Treasury, helped by political winds blowing in favour of getting tough on the banks.But the two provisions that bore the brunt of the industry's lobbying efforts - the Volcker Rule to curb proprietary trading and a plan to force banks to spin off swaps desks - were softened last night to secure the votes of moderate Democrats and Republicans.

Banking executives and investors reacted positively to the agreement on financial regulation, saying it was better than expected."We are all breathing a sigh of relief here," a Wall Street banker said. "It could have been much worse and, on balance, we can live with this."The shares of most large US banks were higher in midday trading in New York, with JPMorgan Chase, Citigroup, Goldman Sachs and Morgan Stanley leading the way.