The billionaire investor George Soros said on Wednesday that he supported President Barack Obama's proposal to limit the size of banks. But he warned that it was too early to put such a plan in place and that it did not go far enough. Soros' comments at the World Economic Forum here clashed with those made earlier in the day by the president of Barclays, Robert E. Diamond Jr., who said that the effects of shrinking banks 'on jobs and the economy would be very negative.' 'There is no evidence that shrinking banks is the answer,' Diamond said during a panel discussion. Obama's plan is becoming a focus of discussion among conference participants. Among the measures Obama presented last week was one to prohibit banks that hold deposits from owning or investing in hedge funds or private equity funds. While some banking executives fear that such rules would hamper earnings and liquidity in the market, supporters say the plan would reduce the risk of governments having to step in again to bail out banks because their size and interconnections posed a risk to the rest of the economy. Soros said he was 'very supportive' of Obama's plan but added that it 'does not go far enough.' 'Some banks will spin off investment banks and those will be substantial,' he said at a lunch in Davos. 'They then have to be controlled so that they don't fail.' But he also said that such rules should not be put in place until 'banks earn their way' out of the financial crisis. Jonathan M. Nelson, chief executive of the private equity firm Providence Equity Partners, also raised doubts that smaller banks made for a more stable financial market. 'Some say less diversified banks are weaker banks,' he said. 'As customers, we like big banks because they can provide us with a variety of products.' Instead of splitting up banks, Diamond said, stricter capital requirements and rules requiring banks to use less leverage and hold bigger pools of liquidity would help make the financial system more stable. As an example, he mentioned how Barclays had abandoned a plan to buy Lehman Brothers after realizing that had it done so, the bank would not be able to fulfill its own capital requirements. Soros warned that now, with the financial crisis largely passed, banks had a desire to 'carry on as before,' and that it was up to regulators to keep that from happening. But he added that regulation -- like markets -- would never be perfect. 'You need to keep regulation to a minimum because it's worse than markets,' he said, 'but you can't do without it.' 