Soros says Obama bank levy premature, backs other plans

Wed Jan 27, 2010 12:53pm EST
 
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DAVOS, Switzerland (Reuters) - Billionaire financier George Soros said on Wednesday U.S. President Barack Obama's plan to impose a tax on large banks was premature and his wider proposals to rein in banks' activities may not go far enough.

"To tax the banks when they are doing everything they can to get out of a hole is the exact opposite of the policy you are trying to pursue," Soros told a meeting on the fringes of the World Economic Forum in Davos.

Obama has said Wall Street banks should pay up to $117 billion to reimburse taxpayers for the financial bailout.

Soros, who made his fortune placing large bets in financial markets, said he was in favor of Obama's other more sweeping reform, which aims to prevent banks from engaging in proprietary trading or investing in hedge funds or private equity funds.

But he said the proposals may fall short.

"Some banks will spin off their investment banks and they will be very substantial and they will be too big to fail," Soros said.

He acknowledged massive financial and trade imbalances, particularly between the United States and China, would need to be addressed in order to prevent future bubbles. This would require China to let its exchange rate rise against the dollar.

"The case for revaluing the renminbi is getting stronger and stronger," he said.

(Reporting by Peter Thal Larsen, editing by Mike Peacock)