Posted on 01/22/2010 1:01:20 PM PST by Ernest_at_the_Beach
Before Barack Obama said anything today about his second Glass-Steagall, the story was evident from who stood next to him, and who was banished down the row of public officials.
To President Obama’s right was “this tall guy”, the 6′ 7″ Paul Volcker, who has until today been a lone voice in his administration calling for structural reform on Wall Street. Further along was Tim Geithner, the Treasury secretary, who has until now resisted it in favour of tighter regulation.
If Mr Obama is serious, as he appears to be, he is enacting a reform that will strike at the heart of Goldman Sachs’ business model - a combination of advisory, financing and asset management, and co-investing of its own money alongside that of clients.
The question is whether these restrictions would apply to all bank holding companies - including Goldman and Morgan Stanley - or only to deposit-taking institutions.
If it is the latter, then Goldman and others would be able to get around it by divesting their deposit-taking subsidiaries. If it applies to bank holding companies, then they could not. In either case, banks such as J.P. Morgan face sweeping changes.
The “Volcker rule” is far more radical than simply stopping banks such as Goldman operating proprietary trading desks. Instead, it addresses conflicts of interest at the heart of Wall Street.
(Excerpt) Read more at blogs.ft.com ...
fyi
1) We cannot ever have a case of “too big to fail again”
2) We cannot have financial institutions playing hight stakes poker with depositor cash at risk
3) We cannot have any more favoritism of Wall St. any longer
4) No more bailouts for failure
I think it is interesting that we heard NOTHING from Volcker or about Volcker since the Obama Administration came into being until AFTER Tuesday’s thumping in Massachusetts. He was the ignored guy in the Obama Administration and his economic policy council the entire year. I remember seeing a segment on CNBC in Sept. or October, I believe, when Maria Bartoromo (sp?) had lined him up for an interview and he was very much taken off-guard, and he literally blew her off in what appeared to be embarrassment — I assumed he didn’t want to be caught in a lie defending the indefensible that this Administration has been doing for most of the past year.
Well, now that their entire work of the first year has been utterly rejected by the voting public, it’s time to bring in the grown-ups to straighten things out and who better than Volcker.
JMHO.
“1) We cannot ever have a case of “too big to fail again””
G1 putting that in quotes, because it was never true, a self-serving lie told by Geithner and crew to socialize risk, and deflect attention from the risk-increasing markets of derivatives especially cdos.
The Republicans could own the Democrats if they came out for return to prudent regulations and banning of most cdos (as if they were not illegal anyway), but they will not. Already one Rep. snob is belting out the “populisssssst” word.
Ask yourself such questions as: Who passes deficit spending budgets that creates inflation that devalues your earnings and savings? Who controls tax rates? Who, with years of deficit spending has created a national debt that has this nation on the brink of bankruptcy? Who plays one group against the other by encouraging envy and jealousy? Who never reduces it’s spending or payroll even during tough economic times? Who tells you what to think and do and act?
Who established the Fed? Who controls the money supply? Who restricts the private sector from creating new businesses and new jobs? Who spends money on worthless and expensive green programs that contribute very little to the economy? If you say banks and Wall Street your head is deep in denial. It is GOVERNMENT. Banks and Wall Street may add a little to the mess, but what they do affects a few, while what GOVERNMENT DOES AFFECTS THE ENTIRE NATION AND YOU.
1) We cannot ever have a case of “too big to fail again”
This is what anti-trust law is for. If a single financial institution is so big that its failure poses a systematic risk, then break it into 2 or 3 smaller insitutions that can be allowed to succeed or fail in the free market on their own merit. In some cases, I suspect the primary reason for mergers and acquisition is to create behemoths so big that they are guaranteed taxpayer support.
2) We cannot have financial institutions playing high stakes poker with depositor cash at risk
Absolutely. Bring back Glass-Steagall. We had a freer market with more competition in 1990 under Glass-Steagall than we do today in 2010.
3) We cannot have any more favoritism of Wall St. any longer
Absolutely. Limit Credit Default Swaps to insurance on actual debt rather than bets by third parties on company's credit-worthiness. And make the Credit Default Swap market a regulated and transparent exchange rather than private trades.
4) No more bailouts for failure
The problem isnn't companies taking risks. That's what they're supposed to do. The problem is companies taking risks and then getting bailed out with taxpayer dollars.
The Fed is a bunch of money printers. Until the system is reformed and we have sound money, nothing can change. We have to bite the bullit and have the depression now with deflation or we’re going to go on like this for another 10-15 years, with massive inflation to boot. Thinking that there is some human being with super intelligence who can figure out how to properly manipulate interest rates for the greater good is naive.
The greatest time of prosperity for this country was during the late 1800’s. Wages increased 3 percent per year while prices decreased a similar amount. It was the time before the country became a Welfare-Warfare state. True we didn’t have the interest, iPhones or flat screen televisions, but more people became wealthier than can be appreciated now.
There is no Lone Ranger out there with his silver bullet who’s gonna save us. There are no men with the wisdom of our founding fathers, lurking in the shadows waiting to take the reigns of power at the precise moment.
All we have are a bunch of demented 80 plus year olds in the senate and a bunch of badly dressed guys with tupees in the house.
The only thing holding back the Grand Larceny in far too many hearts on Wall Street was Glass-Steagall. Dodd, Graham, Schummer and the others who listened to lobbyists and sold out the American investors/people/public should be publically humilated in every way possibly imaginable until Jesus comes!!!
That law was put there to be a roadblock to excessive human greed for power with the excesses that preceeded the last gigantic crash of 1929!!!
I have to leave the thread now and go into town and check out a new source for 9mm ammunition for target practice, by!
Paulson did it too. The “too big to fail” was the loaded gun that they held to the Congress’ collective heads.
And I would assert that it is true because you can have institutions that grow so large that they can take out the US economy.
GLASS STEAGALL - John McCain almost brought it back in 2009 - One nice thing I can sat about him. Maybe after election day it will be back on the table.
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