Why Paul Volcker is (once again) The Man
“I think we’d all be doing a lot better if somebody like you was in there.”
–Ron Paul to Paul Volcker
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Quite the surprising comment from author of the book End the Fed. Its from this article in the FT:
“By common consent, Paul Volcker is never happier than when he is casting for trout in a river or lake, far from the chaos of New York and Washington.
Then, the former chairman of the Federal Reserve will happily wait long hours before landing a catch, and afterwards share in the bonhomie of his fellow fishermen. “When he is away fishing he is a delight,” says Jim Wolfensohn, the former World Bank chief who hired Mr Volcker to join his investment firm on leaving the Fed. “He lets his guard down and nobody is interested in his views on interest rates.”
That quiet patience is now serving Mr Volcker well. Almost exactly a year ago, Mr Volcker presented a report calling for restrictions on banks engaging in risky activities such as proprietary trading while continuing to enjoy taxpayer support for insured deposits.”
Volcker’s proposal is common sense: If you get a taxpayer guarantee, you cannot behave in a way that is potentially reckless putting taxpayer dollars at risk.
I especially like the next excerpts:
“Long appalled by the lack of what his former protégé Gerry Corrigan calls “financial statesmanship” on Wall Street, Mr Volcker has become increasingly critical of banks since the financial crisis broke.
In mid 2009, he joked that the only useful recent banking innovation was the invention of the ATM; by late last year, this was no longer presented in jest and he was deploring excesses in risk-taking and bonuses.”
Good read the full article (free if you register).
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Source:
Man in the News: Paul Volcker
Krishna Guha and Gillian Tett
FT, January 22 2010 21:12
http://www.ft.com/cms/s/0/47155caa-0796-11df-915f-00144feabdc0.html
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January 24th, 2010 at 8:56 am
I agree that following Volcker’s lead would be smart – but will anything meaningful be able to make it through Congress? I have my doubts….
January 24th, 2010 at 9:00 am
The scary thing is that something as obvious correct as “you cannot gamble with your assets at the same time as you have taxpayer supported insurance” or that you “cannot take free money from the fed and use it for “investments” that only serves your own purpose and serves not positive purpose for society” or that “any financial activity that is detrimental or create risk for society should be illegal unless you can demonstrate a positive effect for society that justifies the risk”. Wall street has swallowed a third of our economy and nobody has ever asked if that is acceptable. I say let them grow rice and feed the poor, rather than destroy the economy and pray on the poor.
January 24th, 2010 at 9:13 am
………”Almost exactly a year ago, Mr Volcker presented a report calling for restrictions on banks engaging in risky activities such as proprietary trading while continuing to enjoy taxpayer support for insured deposits.
It was ignored. Though Mr Volcker played an important role in the Obama election campaign, validating the inexperienced candidate, during the past year he appeared to be cast into the outer political wilderness, a lonely advocate of radical structural reforms – almost a figure of fun.
The former Fed chief was given an advisory committee to chair. But actual policy was made by Treasury Secretary Tim Geithner, National Economic Council chief Larry Summers and White House budget director Peter Orszag”……….
Now that the horses have left the barn they call in Volcker. A little late. Shades of the UN.
January 24th, 2010 at 9:24 am
Patrick I agree. The horses are out of the barn. We are insolvent. High interest rates tied to bonds of a bankrupt country (106 trillion in unfunded liabilities and 12++++trillion of on the book debt) isn’t going to lure investors.
Besides, the interest on the deficit with Volckerite rates would be the spike through the heart.
The gig is up.
January 24th, 2010 at 9:32 am
[...] Why Paul Volcker is once again The Man. (Big Picture) [...]
January 24th, 2010 at 9:44 am
If I remember Volker’s last stint, mortgage interest rates were in double digits. Tightening credit now might mean a sustained turn around in the dollar, but it would kill us. Will Tall Paul save the ranch by burning down the house and the barn? Will little Benny be pulled from the well? Stay tuned . . .
January 24th, 2010 at 10:02 am
“Volcker’s proposal is common sense: If you get a taxpayer guarantee, you cannot behave in a way that is potentially reckless putting taxpayer dollars at risk.”
you would think that would be a normal reaction- but poor advice from bank backer’s Geithner and Summers obviously had the administration’s ear until recently
MA-
good observation- not sure if Volcker will be in the Fed seat- from a strictly political standpoint- it would be better to have BB get renominated- that way if things look grim down the road the finger can still be pointed BB’s way-
if Obama puts in his man- then he owns anything that happens from that point forward-
also- from just a selfish POV- I would like to see BB oversee the mess he has created- to be there overlooking the economic devastation- so that he can take full blame and understand that the ideas bouncing around in his head were the not the path to prosperity but the path to ruin
January 24th, 2010 at 10:21 am
Volcker is the man. Get him the hell in there ASAP.
WE NEED THE BIG GUY!!!
January 24th, 2010 at 10:25 am
Volker is simply a nonpartisan public servant, with a great deal of respect.
The mere fact that he is finally being heeded is a positive.
He represented, more than any recent Fed Chairman, true independence.
I wonder where he stands on the audit of the Fed.
January 24th, 2010 at 10:40 am
I strongly support the proposal, but let’s not make a demigod of the man. According to Barney Frank, the plan was always to focus on stabilizing the economy first, and then reform it after we had stopped falling. Which is exactly what President Roosevelt did in 1933–he initiated immediate measures to help starving people through the Federal Emergency Relief Act in May 1933, and stabilize the existing bank structure through the Emergency Banking Act in March. Meanwhile, the Securities Act of 1933 for the first time required companies to disclose information to investors. The key word here is “emergency.”
Once these emergency measures had been put in place, Roosevelt began on more enduring reforms meant to prevent another Depression. Glass Steagall had been debated for years before the Depression, and it wasn’t passed until June 1933. The Banking Act of 1935 further reformed the bank system. The Securities and Exchange Commission wasn’t created until Securities Act of 1934.
It was smart to wait for stability before beginning reform, and the administration seems to be proceeding apace with its plans for major reforms. We’ll see if the GOP is willing to follow through on its promise to blockade any attempt at reforming Wall Street. If they do, I think the Dems could actually pick up seats in the Senate in November.
January 24th, 2010 at 10:45 am
Bank of America announces its new BernankeBucksTM program. Just send a TEXT to your senators’ offices with the promotional code CANVOLCKER and one dollar will be instantly credited to your checking account.
Thanks, Supreme Court!
January 24th, 2010 at 11:09 am
“Long appalled by the lack of what his former protégé Gerry Corrigan calls “financial statesmanship”
This is the bottom line. The Ayn Randian rationalization that “pure greed is good” will be vanquished.
January 24th, 2010 at 11:10 am
volKER! volKER! volKER! volKER! ………….. this needs to be the new rallying cry
January 24th, 2010 at 11:30 am
“Now that the horses have left the barn they call in Volcker”
“Glass Steagall had been debated for years before the Depression”
“I wonder where he stands on the audit of the Fed”
“now? Crickets”
Voter Power via Referendums & www
http://en.wikipedia.org/wiki/Referendum
scary sounding isn’t it
January 24th, 2010 at 11:35 am
Volcker’s focus on shifting the banking industry out of the casinos and back to “Main Street” enterprises is an excellent direction. The man is a true statesman and we should all be grateful that he has the President’s ear. And lets hope this is an honest change in policy direction (which I believe it is) and not just a political reaction to recent events. But then just to show my naiveté, I voted for Obama believing he was a centrist.
For those who want Volcker to somehow reenact his actions when he served as Federal Reserve Chair, please understand that we are facing the exact opposite economic circumstances today. The 80s were characterized by high inflation, rapid labor force growth and excessive demand for new housing, autos, etc. Today we face a great risk of deflation, a shrinking labor force and reduced demand.
However, with respect to the economy in general, please keep in mind that job creation has yet to begin in spite of nearly $3 trillion (25% of GDP) in stimulus in the form of roughly equal shares of deficit spending and quantitative easing. What will happen if these props are removed? Realistically, what is going to ignite economic growth sufficiently to offset a 25% “safety net”?
The Great Depression was prolonged for an additional half decade because people and politician became disgusted with the deficit spending and demanded balanced budgets. We appear to on a course of letting history repeat. I do not particularly like how we are deficit spending today (far too much in one-time outlays and far too little in long-term investments both public and private). Nevertheless I am scared to death of the results of reducing deficit spending and quantitative easing at this fragile point in the “recovery” of a very sick economy.
I fear a failure to reappoint Bernanke will be viewed as a mandate to balance the budget and reign in the printing press. This will lead to disastrous consequences in my opinion.
January 24th, 2010 at 11:35 am
davossherman@gmail.com Says: January 24th, 2010 at 9:24 am
Patrick I agree. The horses are out of the barn. We are insolvent. High interest rates tied to bonds of a bankrupt country (106 trillion in unfunded liabilities and 12++++trillion of on the book debt) isn’t going to lure investors.
Besides, the interest on the deficit with Volckerite rates would be the spike through the heart.
The gig is up.
Marcus Aurelius Says: January 24th, 2010 at 9:44 am
If I remember Volker’s last stint, mortgage interest rates were in double digits. Tightening credit now might mean a sustained turn around in the dollar, but it would kill us. Will Tall Paul save the ranch by burning down the house and the barn? Will little Benny be pulled from the well? Stay tuned . . .
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Yes, x2, of course. (incl. you, PN~)
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and, lest we forget, those beautiful i-rates, the handiwork of Volcker, engineered to save the Petro$, also managed to drive a stake through the heart of the American Manufacturing sector, and, at the same time, fatten-up the Pension Plans–of the survivors–that were used to fuel the LBO-led Drive to consolidate the rest of them..
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http://waronyou.com/forums/index.php?topic=3124.0
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“During his presidential campaign, Barack Obama consistently promised Americans “change.” Such promises aren’t new to the voting public.
When Jimmy Carter ran for president, he said: “The people of this country know from bitter experience that we are not going to get … changes merely by shifting around the same group of insiders.” And top Carter aide Hamilton Jordan promised: “If, after the inauguration, you find a Cy Vance as Secretary of State and Zbigniew Brzezinski as head of National Security, then I would say we failed. And I’d quit.” Yet Carter selected Vance as Secretary of State and Brzezinski as National Security Adviser; the “same group of insiders” had been shifted around; and Jordan did not quit.
Carter’s administration was dominated by members of the Trilateral Commission, which had been founded by Brzezinski and David Rockefeller. In 1980, when Ronald Reagan was campaigning against Carter, he protested:
I don’t believe that the Trilateral Commission is a conspiratorial group, but I do think its interests are devoted to international banking, multinational corporations, and so forth. I don’t think that any Administration of the U.S. Government should have the top nineteen positions filled by people from any one group or organization representing one viewpoint. No, I would go in a different direction.
Yet after his election, President Reagan picked 10 Trilateralists for his transition team, and included in his administration such Trilateralists as Vice President George Bush, Defense Secretary Caspar Weinberger, U.S. Trade Representative William Brock, and Fed Chairman Paul Volcker. Yet the entire North American membership of the Trilateral Commission has never numbered much over 100.
The reason that presidential candidates’ promises of “change” go largely unfulfilled once in office: they draw their top personnel from the same establishment groups — of which the Trilateral Commission is only one.
Chief among these groups is the Council on Foreign Relations (CFR), the most visible manifestation of what some have called the American establishment. Members of the council have dominated the administrations of every president since Franklin D. Roosevelt, at the cabinet and sub-cabinet level. It does not matter whether the president is a Democrat or Republican. As we will later see, Barack Obama is no exception to CFR influence…”
http://www.thenewamerican.com/index.php/usnews/foreign-policy/1462
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http://clusty.com/search?input-form=clusty-simple&v%3Asources=webplus&query=Volcker+Trilateral+Commission+Council+on+Foreign+Relations
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f411,
excuse me for saying so, but you are being used as a Tool, or, just, a Tool.
January 24th, 2010 at 11:57 am
Mark,
Have you watched “Collapse” yet?
Ruppert may well have a crackpot side but he also appears to be the target of a lot of oddly well-crafted counter-info on the internets …
His presentation in the movie seems to me lucid and precise. Your thoughts?
January 24th, 2010 at 12:09 pm
Volker is fine… but this stuff all seems misplaced.
No “prop trading” caused any of the serious major losses. No “private equity” exposures causes any of the serious problems. Firms with large depository bases did no worse or better than firms without them. Large firms did not do worse than small firms. No firms were “too big to fail”… as Bear, Lehman, AIG, Wachovia, WashingtonMutual, Fannie, and Freddie all failed. One cannot separate “prop” from “market making” … what happens when a client wants to trade a large block of stock representing 5-days average volume? I know this will take me 1-2 months to liquidate. Can I offer him a price? (but now I have “prop” exposure).
What we experienced in 2008 was the bursting of a real estate bubble. Banks lend mortgages on real estate for 5-10x leverage. Ideally… regulators would’ve told banks they needs to have more downpayment (20% and up) as the market was booming. This did not happen as regulators were asleep.
Ironically… this is of no immediate problem. The bubble has burst. The problem was the housing market, not “everything”. Next time… in 20- or 50-yrs will regulators be counter-cyclical? Will bank executive make different decisions so they are not all on the same side (failing) in the aftermath?
Nothing I hear from Volcker or Obama seems to understand these basic issues. Alot of things I hear from Volcker make me think he doesnt understand simple modern banking and trading. Everyday things.
January 24th, 2010 at 12:17 pm
Love Volcker…in fact, as far back as early 2008, I was calling on this blog for him to be on a committee to figure out how to get out of this mess.
That said, it is an indictment that we must drag an 82 year old man out of his retirement to save us. BR is right in his aversion to politics…it is the politics of getting people re-elected that make it so they won’t take the tough medicine now. You could make the argument that politics led to Greenspan’s rise to power, which doomed us all. Volcker seems to be the only person independent enough from both parties to get this reform started. My worry is who has the balls to succeed Paul?
January 24th, 2010 at 12:17 pm
“well-crafted counter-info” .. I’m against TBTFight .. M&A squeezes* out job openings and is 1 more step towards a monopoly .. once a monopoly exists in this modern world of manufacturing – look out slaves
* I understand thats our cap’ist system .. thats why I rail against it so much .. someone needs to remind you choirboys that life is not $s in an account** / its what you buy with those $s
ps before submit – ** granted $s in accounts matter when your broken down old & gray
January 24th, 2010 at 12:56 pm
My view is that Obama’s proposals for New Bank Regulations are more “Phony Populism” (to borrow the WSJ phrase) than an honest attempt at any Reform to the Financial System with the EXPECTATION that many of these proposals will be shot or watered down by a Congress pressured by the Banking Lobby.
It is an Election Year. These ‘proposals’ could have been put out there last year when the Market was up 40 or 50%. Neither Political Party is going to push for any Reform to the Financial System that has any real TEETH to it that could sink the stock market and the economy.
The only thing Obama is going to do is get out in front of the Republicans with this kind of stuff to pander to the Populist Vote.
Expect more ‘stimulus bills’ (in one form or another) from this Administration.
I’d like to see a person similar to Volker’s mindset get nominated.
It’s not going to happen. Is there a push from the Obama Administration and Congress for someone of his caliber to be nominated??– No. The Banking Lobby doesn’t want it to happen and neither do the majorities in Congress.
Lil’ Ben is going to be Reconfirmed. QE easing is going to continue until the unemployment situation, M2 money supply (and Inflation) sharply reverses and the private sector picks up the slack.
January 24th, 2010 at 1:25 pm
A parable…..The new team
Ok the team was a disaster and the coach was fired.
The new coach was brought in to shake up the team.
The previous record was an abysmal 4 and 10.
The new coach promised a new system of play.
A year later the record was 0 wins and 14 losses.
He blamed the previous coach stating that he inherited the team.
But he really didn’t change the teams play.
He kept the same assistant coaches and instead of bringing in new players he kept the same old players and gave them big bonuses.
When asked by the media what was wrong he screamed it’s all the old coaches fault.
My, my: sound familiar???
As always, your mileage might vary….
January 24th, 2010 at 1:35 pm
Steve,
see: “The Trilateral Commission was formed in 1973 by private citizens of Japan, Europe (European Union countries), and North America (United States and Canada) to foster closer cooperation among these core democratic industrialized areas of the world with shared leadership responsibilities in the wider international system. Originally established for three years, our work has been renewed for successive triennia (three-year periods), most recently for a triennium to be completed in 2012.
When the first triennium of the Trilateral Commission was launched in 1973, the most immediate purpose was to draw together—at a time of considerable friction among governments—the highest-level unofficial group possible to look together at the key common problems facing our three areas. At a deeper level, there was a sense that the United States was no longer in such a singular leadership position as it had been in earlier post-World War II years, and that a more shared form of leadership—including Europe and Japan in particular—would be needed for the international system to navigate successfully the major challenges of the coming years.
The “growing interdependence” that so impressed the founders of the Trilateral Commission in the early 1970s has deepened into “globalization.” That interdependence also has ensured that the current financial crisis has been felt in every nation and region. It has fundamentally shaken confidence in the international system as a whole. The Commission sees in these unprecedented events a stronger need for shared thinking and leadership by the Trilateral countries, who (along with the principal international organizations) have been the primary anchors of the wider international system. Doubts about whether and how this primacy will change do not diminish, and, if anything, have intensified the need to take into account the dramatic transformation of the international system. As relations with other countries become more mature—and power more diffuse—the leadership tasks of the original Trilateral countries need to be carried out with others to an increasing extent…”
http://www.trilateral.org/about.htm
~~
http://clusty.com/search?input-form=clusty-simple&v%3Asources=webplus&query=Trilateral+Commission
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“Paul A. Volcker, honorary chairman of the National Committee on American Foreign Policy, was Chairman of the Board of Governors of the Federal Reserve System from 1979 to 1987…”
“…Over the course of his career, Paul Volcker worked in the federal government for over 30 years, serving in office under six presidents–John F. Kennedy, Lyndon B. Johnson, Richard M. Nixon, Jimmy Carter, Ronald Reagan and Barack Obama. Immediately before becoming chairman of the Board of Governors of the Federal Reserve System, Paul Volcker spent more than four years as president of the Federal Reserve Bank of New York, the principal operating arm of the system.
In his two tours of duty as an official of the U.S. Treasury, Paul Volcker served as undersecretary for monetary affairs from 1969 to 1974. In that position, he was responsible for developing and implementing Treasury debt management and federal credit policies. On behalf of the United States, he conducted international monetary negotiations during the transition from the Bretton Woods fixed exchange rate system to the more flexible system of floating rates that has prevailed since the early 1970s…”
“…Paul A. Volcker is chairman of the Board of Trustees of the Group of Thirty and of International House and co-chairman of the Financial Services Volunteer Corps. He is also a trustee of the Board of Directors of the Japan Society, the American Council on Germany, the American Assembly and the Institute for International Economics. In addition, Mr. Volcker is an overseer of TIAA-CREF, the leading private retirement system in the United States. Mr. Volcker, a former chairman of the Trilateral Commission, also serves on a number of other public and private advisory boards.
Suggested Programs Globalization and World Finance …”
Fee Range $$$$$
http://www.bigspeak.com/paul-volker.html
~~
January 24th, 2010 at 1:42 pm
Timothy Geithner and the Group of Thirty
Treasury Secretary nominee Timothy nominee’s connection with the so-called Group of Thirty should not be ignored. By Gregory A. Hession
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http://clusty.com/search?input-form=clusty-simple&v%3Asources=webplus&query=Group+of+Thirty
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http://www.muckety.com/Paul-A-Volcker/2400.muckety
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Trifecta living people who are connected to the Bilderberg, CFR and Trilateral (expanded)
http://mapper.nndb.com/maps/595/000001592/
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Transor,
to your Q:, No, I have not seen that vid. from Ruppert..
January 24th, 2010 at 2:00 pm
A reader asks: So what ARE your politics?
I am a political independent who leans Libertarian; I favor low taxes, no overseas entanglements unless absolutely necessary, and de minimus government interference in matters of personal choice (birth control, gay marraige, abortion, etc.) I have no problem with legalized EVERYTHING — I don’t need a paternalistic state telling me whether I can smoke pot/shoot heroin/commit suicide. I am also a 1st Amendment absolutist.
I was a “Jacob Javitz” Republican until Reagan put the GOP into bed with the religious right — that was when I said good bye to all parties as corrupt and incompetent whores who will do/say/promise anything to get elected.
January 24th, 2010 at 2:12 pm
“all parties as corrupt and incompetent whores who will do/say/promise anything to get elected.”
Yes…including run credit-to-gdp up to 370% and leaving us in a deflationary debt crash that is just starting.
January 24th, 2010 at 2:20 pm
I have been looking at some of Warren Mosler writings, and while I still don’t have my head completely wrapped around his macroeconomic model, there is much food for thought. I’ll note in particular something Mosler published in September 2009 – “Proposals for the Treasury, the Federal Reserve, the FDIC, and the Banking System” -
http://mosler2012.com/wp-content/uploads/2009/03/toronto.pdf
I post this here because Mosler shares some themes with the “Volcker Plan”. Here are some of his points about banking –
1. Banks should only be allowed to lend directly to borrowers, and then service and keep
those loans on their own balance sheets. There is no further public purpose served by selling
loans or other financial assets to third parties, but there are substantial real costs to
government regarding the regulation and supervision of those activities. And there are severe
consequences for failure to adequately regulate and supervise those secondary market
activities as well. For that reason (no public purpose and geometrically growing regulatory
burdens with severe social costs in the case of regulatory and supervisory lapses), banks
should be prohibited from engaging in any secondary market activity. The argument that these
areas might be profitable for the banks is not a reason to extend government sponsored
enterprises into those areas.
3. Banks should not be allowed to have subsidiaries of any kind. No public purpose is
served by allowing bank to hold any assets ‘off balance sheet.’
4. Banks should not be allowed to accept financial assets as collateral for loans. No public
purpose is served by financial leverage.
5. US Banks should not be allowed to lend off shore. No public purpose is served by
allowing US banks to lend for foreign purposes.
6. Banks should not be allowed to buy (or sell) credit default insurance. The public purpose
of banking as a public/private partnership is to allow the private sector to price risk, rather than
have the public sector pricing risk through publicly owned banks. If a bank instead relies on
credit default insurance it is transferring that pricing of risk to a third party, which is counter to
the public purpose of the current public/private banking system.
7. Banks should not be allowed to engage in proprietary trading or any profit making
ventures beyond basic lending. If the public sector wants to venture out of banking for some
presumed public purpose it can be done through other outlets.
January 24th, 2010 at 2:28 pm
Mark E; yes thank god the people in power around the world are actually meeting and exchanging ideas and information ;-)
January 24th, 2010 at 2:52 pm
“I was a “Jacob Javitz” Republican until Reagan put the GOP into bed with the religious right — that was when I said good bye to all parties as corrupt and incompetent whores who will do/say/promise anything to get elected.”
Ah, Reagan – the most overrated prez in the history of the Republic, an administration characterized by a quadrupling of the debt, the bone-chilling Iran/Contra scandal, and a whole lot of mindless flagwaving which made people feel good about America in a superficial kind of way but don’t bore me with policy…
Whenever I see Peggy Noonan on a talk show these days, acting like some kind of wizened elder statesman, I want to puke.
Agree 100% that the GOP lost its soul on Reagan’s watch (bring back Barry Goldwater).
January 24th, 2010 at 3:22 pm
There is no will or commitment from either the Obama admin or mostly assclowns in Congress to change the US economy dependence on Financial capitalism ( asset bubbles, ponzi schemes ) so Bernanke will be confirmed and Americans ( with a larger number becoming more and more tapped out ) will get more ‘extend and pretend’ and kicking of the can down the road….
This is unsustainable so something is going to snap !
January 24th, 2010 at 3:24 pm
So perhaps soon we’ll see formation of a populist 3rd party ( that can win ) to open up a can of whoop ass on assclown GOP and Dems.
January 24th, 2010 at 3:36 pm
Barry,
You may be just a little too excited in your title that Volcker is once again the Man. I assume by this and your statement that “Volcker’s proposal [to restrict prop-trading activities] is common sense: If you get a taxpayer guarantee, you cannot behave in a way that is potentially reckless putting taxpayer dollars at risk.”
On the surface restricting prop activities at backstopped banks sound great. But, did you not suspect that any reform initiatives from Team Obama might be quite something other than how it sounds? Clusterstock’s John Carney exposed Obama’s latest anti-bank posturing as nothing but a hoax on the very same day this latest reform initiative was announced:
“A person familiar with the operations of one big Wall Street bank said it expects that new regulation will affect less than 1% of its overall business. The key phrase is “operations unrelated to serving customers.” The banks plan to claim that much of the business in which it engages is related in one way or another to serving customers. Even proprietary trading, for instance, can become related to customer service if it is done through internal hedge funds in which some outside clients are permitted to invest.”
“The market is getting this wrong” said a person from another bank. In short, your being duped by this little PR message underscores how well Team Obama is effectively working to be seen as Anti-Business, and specifically Anti-Banks, working towards real reforms and appeasing populist anger when in fact he is doing nothing of the sort for mainstream America. The very disappointing thing is how your title misleads your readers to believing that something of merit is to be derived from the latest announcement on restricting banks prop trading activities.
Trust amongst our policymakers is at about a zero level with me, and I am glad John Carney spotted the fly in the ointment as quickly as he did. The success rate of Reform Failure is running near 100%, and any headlines that fails to parse out the reform failures only counterproductive towards the aim for any change we can believe in.
The whole Carney piece is a worthwhile read. http://www.businessinsider.com/big-banks-have-already-figured-out-the-loophole-in-obamas-new-rules-2010-1
Le plus change, le meme chose.
January 24th, 2010 at 4:37 pm
The appearance of influence or access . . . will not cause the electorate to lose faith in our democracy. By definition, an independent expenditure is political speech presented to the electorate that is not coordinated with a candidate. The fact that a corporation, or any other speaker, is willing to spend money to try to persuade voters presupposes that the people have the ultimate influence over elected officials.
Citizens United v. Federal Election Comm’n, 558 U.S. ___, 44 (2010) (Kennedy, J.)
Trust amongst our policymakers is at about a zero level with me . . . .
You and a lot of others, John. So maybe that makes Justice Kennedy’s statement true. The appearance of corporate influence or access will not (future tense) cause the electorate to lose faith in process. Because we’ve already lost all faith in the process.
January 24th, 2010 at 5:40 pm
I am also a 1st Amendment absolutist.
so what’s your take on the Citizens United ruling?? (me? I fall into the bad case making bad law camp)
January 24th, 2010 at 11:50 pm
Paul Volcker is a wise man, and right about the banks.
But his appearance with Obama was just an Obama photo-op sermon. There will be no follow through.
January 25th, 2010 at 12:23 am
I like it when these guys get old, get to the point where they have nothing to lose and turn and bloody their former master’s hands
January 25th, 2010 at 12:25 am
Is it true or not that Volcker acted to bail out the big banks in 1982? Frankly all this focus on risk seems well risky. One of the keys of entrepreneurship is to understand risks differently from the average person. Were the people who built the airline industry incapable of seeing the risk of putting large metal tubes filled with humans into the air? If we really want to take the risk out of banking we ought to be looking a lot harder at Mervyn King’s notion of utility banking. That would move all the investment banking, lending functions, out of the banking system altogether. The new institutions might be called stock and bond brokerages. That would diminish systemic risk only to the extent that these institutions would find it somewhat more difficult to employ fractional banking. But they still would and soon enough we’d have regular old bank runs. Granted this would put more discipline into the system. Nothing so concentrates the mind as the possibility of a being on the wrong side of a Nietzchean revaluation of values. Another possibility which is not explored enough is having central banks adopt a mild deflation target, say -.2 to -.9% per annum. If central banks ever managed to attain any credibility on this, it would put the breaks on excessive leverage big time.