I’d rewrite the headline to read “Regulators Once Again Think They are Smarter Traders Than the Weasels Who’ve Been Doing it for 35 years and who have Guaranteed Immunity Against any Type of Financial Fraud”.
I’d rewrite the headline to read: Goldman Sachs is Pissed!
That actually makes me happy.
They will just extend it again when the time comes. This rule does not do squat anyways. It is just a distraction from what should be done. To put back in place Glass-Steagall. If they had not repealed it then the entire 2007 crash could not have happened.
Marxism marches on unimpeded in Obamaland.......
Regulatory agencies voting? They just implement the law already voted on by Congress. This is a slippery slope caused by delegating Congress’ legislative powers to the Executive Branch. Not good.
I disagree with posters who say that this is a good rule, or common sense.
The rule prohibits banks from taking risks. It does not define what is risky, and what is not. You just can’t define that in a law.
Obviously, banks do not try to make losing risks.
The Volcker Rule allows banks to buy as much “sovereign debt” (government debt) as they wish. One might ask, is all sovereign debt not “risky”? How about Greek bonds?
This is the sort of rule that one would expect from a government which does not even understand what is meant by insurance.
The way to handle the banking problem is to let banks who make foolish investments fail. Instead, the government has bailed out some, but not others, and demanded that all the surviving banks agree to take government supervision. Heck, it was government pressure which caused the housing crisis in the first place, but then the banks were blamed. The most careful banks were then taken to courts and shaken down for billions of dollars in fines, as if they (the careful ones) had done something wrong.
This is the government who pretends that a simple rule (“don’t act risky”) will solve everything, as if bankers don”t know something about risk.
Millennia ago Lao tse is said to have spoken thus: “The greater the number of laws, the greater the number of thieves and brigands.” We know where the laws are origination, and that the thieves and brigands are not far away.
There is no law which can tell you what is risky and what is not. This rule is just an excuse for taking to court and shaking down any bank which happens to lose money. So, how likely is it that banks will give loans to investors in new innovations? That would be “risky”! But if they buy government bonds, that is “not risky.” At least, but buying only government bonds, the banks diminish the risk of being attacked by the government. Thus all the capital will be diverted (as most of it already is) into covering government debt, and perpetuating the inflation machine. We will be increasing our diet of seed grain.
When I consider moves like this, I really see no way out, and no way to avoid a disaster. The only investment that considered safe by the regulators, will be in government bonds. The only way to build new plants, especially innovative ones (and innovation is always “risky”) would be to get government grants. Welcome to the socialist future.
They’re going to wear the skids off those deck chairs!