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Here's my quick take on President Obama's move against the banks, known as the Volcker rule.

1. What's the President doing here and what does he hope to achieve?
There's no actual text - only what the President said. But this is big. So big that IF it went through the whole legal structure of banks like Merill/BoA, JP, Goldman have to be rewritten.

It does two things: it says commercial banks - which take deposits - can't use those deposits to speculate in the financial markets using what is known as proprietory trading. Prop desks are THE most profitable part of the US banks. Abotu 1/4 of Goldman's profits announced today would have to be generated in a separate entity in future, says one Wall Street insider.

The second thing is, those banks have got to stop seed-funding hedge funds and private equity groups. This would prevent the creation of off-balance sheet halfway houses which formed the so called shadow banking system before the meltdown. Also, says my Wall Street interlocutor, it "screws" private equity.

Now it would always be open to such banks to break up, demerge and separate the gambling from the deposit taking. If they did that, it would resurrect precisely the situation imposed on the banks in 1933, the so called Glass Steagall. In addition, their access to capital would be limited. They would be smaller, risky, rich-man's banks again.

This is, in principle, so radical that, as one hedge fund insider said to me, if we really believed it was serious there would have been a stock market slump today.

Thirdly the size of the deposit pool owned by any one bank will be limited in practice, as it now is in theory, to 10%. There is a suspicion that certain large US banks are technically in breach of the 1994 law, which will now be updated and enforced.

2. Are they serious - and why have they done it now?

A bit of Kremlinology: they put Mr Volker, aged 82, on the platform. Also Barney Frank and Chris Dodds, the senators who would have to steer this through Congress. That says
a) they're serious
b) the star of Larry Summers, chair of the National Economic Council, who's reported to have oppsoed this, is waning; some in Wall Street also believe Tim Geithner star is waning. This has been cooked up by "true Obama" adviser Austan Goolsbee together with Veteran Carter-era eminence Mr Volcker, is what they're saying down there in those few fetid streets of Manhattan.

I'm told it is not primarily timed off the back of the Massachusetts defeat - it was always going to be timed to take a swipe at Goldman Sachs, whose profits and bonuses were announced today.

If, as they promise, the Republicans oppose this, it puts Obama in a place he wants to be, because while the average radical Democrat voter looks at Wall Street and sees evil capitalists, the average mid-west conservative looks at Wall Street and sees evil East Coast liberals. Zap. Biff. An electoral coalition is reborn?

3. Does it change the way the wind is blowing for the banks internationally?

Yes. Up to December, governments globally had focused on tightening the existing rules and using essentially a market mechanism: higher capital requirements, to reform banking. Now we're into the world of special taxes and levies and forced breakup. All done nationally, not through international conferences, because it's the electorate screaming blue murder againsdt the bankers, all over the world.

The bankers by the way are stunned. "This is all about Massachusetts" they're saying - but they're still stunned. One quipped: "it took the President weeks to react to stalemate in Afghanistan, but 24 hours to react to a setback in Massachusetts".