It worries me that congress is determined to include a ban on prop trading by the banks. Should I be concerned about this as far as high beta stocks for daily trading is concerned or do mutual funds and hedge funds provide most of the liquidity for high beta stocks? Thoughts?
I don't think you have any reason for concern. Reduced liquidity results in more market inefficiencies, which make active trading easier, not harder. To some extent, the banks are competitors to active traders. If you remove a competitor, it becomes incrementally better for those left behind.
I wouldn't worry about it. Who knows what is going to end up happening when the dust settles, but even if they ban prop trading by banks, it won't just go away- they'll just spin off that division into a separate company most likely.