On Thursday morning, President Obama unveiled a proposal that takes aim at the size of the nation’s major financial institutions and seeks to limit the proprietary trading and other risks taken by such institutions. The President was joined by former Federal Reserve Chairman and head of the Economic Recovery Advisory Board, Paul Volcker, who has long pushed for more robust financial overhaul provisions such as those included in today’s announcement.

The new plan – which would bar banks from owning, investing in or sponsoring a hedge fund or a private equity fund, or proprietary trading operations unrelated to customer service – will likely be included in the larger financial regulatory reform effort currently making its way through Congress. In addition, the President requested limits on financial industry consolidation and that broader limits be placed on the “excessive growth of the market share of liabilities at the largest financial firms.”

The timing of the announcement comes one week after the Administration’s proposal to impose a new fee on financial institutions to recoup Troubled Asset Relief Program (TARP) dollars, and seeks to take some attention off of the floundering healthcare reform debate in the wake of Tuesday’s stunning special election upset in Massachusetts. It also indicates the White House’s renewed focus on the larger issue of financial regulatory reform as it works to reframe its agenda and regain control of the political debate.