I testified yesterday to the Senate Banking Committee hearing on the "Volcker Rules" (full pdf version; summary). My view is that while the principles behind these proposed rules are exactly on target - limiting the size of our largest banks and preventing any financial institution backed by the government, implicitly or explicitly, from taking big risks - the specific rule changes would need to be much tougher if they are to have any effect.
Wall Street is strongly opposed to the Volcker Rules (link to the written testimony; webcast) and the discussion elicited some classic Goldman Sachs moments. Gerry Corrigan, a senior executive at Goldman and former head of the New York Fed, suggested that Goldman Sachs has an impeccable approach to risk management and seemed to imply that the firm was not in trouble in fall 2008. When pressed on why Goldman requested and was granted a banking license - and access to the Fed's discount window - in September 2008, he fell back slightly, "There is no question whatsoever that when you look at totality of the steps that were taken by central banks and government, particularly in 2008, that Goldman Sachs was a beneficiary of this."