- The Big Picture - http://www.ritholtz.com/blog -

Volcker: We Need Radical Regulatory Reforms

Posted By Barry Ritholtz On June 25, 2009 @ 3:31 pm In Regulation | Comments Disabled

“The biggest obstacle to Volcker’s reform agenda is Summers”

>

There is a long article at Bloomberg very much worth reading about Tall Paul: Volcker Gets Less Than He Wants in Curbing Wall Street Excesses [1].

Consider the following:

“If Volcker is at one end of the spectrum arguing for tougher financial rules, Summers and Geithner are at the other. Summers pushed for deregulation while Treasury secretary under President Bill Clinton, advocating the repeal of the Glass- Steagall Act, which had separated investment and commercial banking for more than 60 years. Geithner was president of the Federal Reserve Bank of New York during a period when banks ratcheted up their leverage.

Both men are proteges of Robert Rubin, a former Clinton Treasury secretary who served on Citigroup Inc.’s board from 1999 until this year and has been criticized for allowing the bank to pile up $544 billion of derivatives and securities before it became the recipient of more government assistance than any other bank. Rubin declined to comment.”

When it comes to regulatory reform, the Geithner Summers pairing are the phlegmatic duo.

And, they epitomize why Team Obama’s economic legacy will likely amount to very little in terms of lasting change or significant legislation.

O may aspire to FDR’s greatness and legacy, but it is wildly obvious that when it comes to either economics or financial regulations, O is no FDR.

What is it that Volcker wants?

-Impose capital requirements on trading parties, people familiar with his thinking say.

-Make bigger banks smaller

-Reduce the role of an overstretched Fed

-Force Derivatives to be traded on exchanges

-Transparent investor prices of Derivatives;

-More-aggressive capital reserve requirement

-Bigger role for exchanges.

Of course, major Wall Street banks, (such as JPM and Goldman Sachs) ALREADY sent a letter to the New York Fed supporting less supervised clearinghouse.

>

Previously:
Obama Reform Plan Fails to Fix Whats Broken [2] (June 18th, 2009)

http://www.ritholtz.com/blog/2009/06/obama-reform-plan-fails-to-fix-whats-broken/

Obama to Dramatically Reshape FOMC [3] (June 23rd, 2009)

http://www.ritholtz.com/blog/2009/06/obama-dramatically-reshape-fomc/

Source:
Volcker Gets Less Than He Wants in Curbing Wall Street Excesses [1]
Yalman Onaran
Bloomberg, June 25 2009

http://www.bloomberg.com/apps/news?pid=20601109&sid=atBbIcvSgrFs#


Article printed from The Big Picture: http://www.ritholtz.com/blog

URL to article: http://www.ritholtz.com/blog/2009/06/volcker-we-need-radical-regulatory-reforms/

URLs in this post:

[1] Volcker Gets Less Than He Wants in Curbing Wall Street Excesses: http://www.bloomberg.com/apps/news?pid=20601109&sid=atBbIcvSgrFs#

[2] Obama Reform Plan Fails to Fix Whats Broken: http://www.ritholtz.com/blog/2009/06/obama-reform-plan-fails-to-fix-whats-broken/

[3] Obama to Dramatically Reshape FOMC: http://www.ritholtz.com/blog/2009/06/obama-dramatically-reshape-fomc/

Copyright © 2008 The Big Picture. All rights reserved.