Paul Volcker: Volcker Rule 'More Complicated Than I Would Like'

The Volcker rule is too long and complicated and financial lobbyists are to blame, said the man who gave his name to the new regulation on bank trading.

"It's much more complicated than I would like to see," said Paul Volcker during a university talk in Singapore on Wednesday.

The Volcker rule is meant to prevent American banks from making big bets on markets with their own money or from backing private equity and hedge funds.

The 300-page proposed version of the rule, due to come into force next year, was released by the Federal Deposit Insurance Corp and other federal regulators last month.

Volcker, former chairman of the U.S. Federal Reserve, said lobbying by the financial industry had made the proposed regulation much more complex than it needed to be.

"There is no set of lobbyists in the United States bigger, more important and more rewarded than the financial lobbyists," he said.

However he added that the basic principle prohibiting banks engaging in proprietary trading is still contained in the law, whose purpose was reinforced last week by the collapse of brokerage MF Global.

The U.S. firm filed for bankruptcy after risky bets on debt from troubled euro zone nations scared away clients and investors.

"It reinforces the point - I don't want the banks doing the kinds of things they were doing," he said.

(Reporting by Rachel Armstrong; Editing by Erica Billingham)

Copyright 2011 Thomson Reuters. Click for Restrictions.

Comments

[ThomastonPaine]

08:33 PM on 11/09/2011

The Restoration­­ of the firewall of Glass Steagall and Campaign Finance Reform must be the bedrock of any effort to rebuild our broken system.

Background information­­n on 2009 Congressio­­nal attempt at Glass-Stea­­gall Restoration by Senator's McCain and Cantwell that ultimately failed.

http://cantwell.senate.gov/news/record.cfm?id=324753


*Critical piece on the mutation of the "Anything-­­but-Glass­-­Steagall - Volker Rule" which began as less than ideal, and has now become a monstrosity of purposeful complexity and exemption:

http://www.nytimes.com/2011/10/22/business/volcker-rule-grows-from-simple-to-complex.html?scp=5&sq=volker%20rule%20complicated&st=cse

From the "NY Times" article:

Former Senator Kaufman expresses the desperation­­ of many in simply and logically calling for a restoration­­ of Glass-Stea­­gall:

“I don’t know if this Congress will address this,” Ted Kaufman said. “I won’t try to forecast. But I believe from the bottom of my being that we’ll eventually have to restore Glass-Stea­­gall. The only question is, How much agony do we have to go through before we do it? We know the solution, but do we have the will?” In the meantime, “It scares the hell out of me. We can’t afford to have this happen again.”

*See how each in Congress voted in 1999:

Gramm-Leac­­h-Bliley Act Senate Vote to Repeal Glass-Stea­gall:
http://www.govtrack.us/congress/vote.xpd?vote=s1999-105

Gramm-Leac­­h-Bliley Act House Vote to Repeal Glass-Stea­gall:
http://www.govtrack.us/congress/vote.xpd?vote=h1999-570

[GetRealSoon]

10:29 PM on 11/09/2011

Well said and stated.

[CreativeGenerations]

06:45 PM on 11/09/2011

One of the main problems, IMO... as many did warn... is that the new financial laws were begun before certain necessary definitions had been worked out. As a result everything that was/is already in the chutes is being tabled until the definitions can be agreed. If it's gridlock they wanted, they got it. Or at least the excuse for it. Perhaps they can find a way to resolve the specific issues that those who are working on this, have experienced. The 'right' people don't seem to be feeling flexible on getting the terminology 'right.' More options are available, but ignored.

There needs to be a better way.

[Jim Mauroff]

06:42 PM on 11/09/2011

This is what makes regulations complicated, it's all the carve-outs (exceptions, protections and favors).

[rolor]

05:20 PM on 11/09/2011

Paul Volcker: Volcker Rule 'More Complicated Than I Would Like'

Yes... it is... reinstate Glass-Steagal.

[William McKibbin]

02:18 PM on 11/09/2011

Paul Volcker should now denounce the new law and insist that his name not be associated with it...

[astheworldturns]

05:41 PM on 11/09/2011

The basics are still in the law. It only got complicated because of the financial lobbyists.

[Rteefact]

11:55 AM on 11/09/2011

"However he added that the basic principle prohibiting banks engaging in proprietary trading is still contained in the law, whose purpose was reinforced last week by the collapse of brokerage MF Global".

Thats what makes me nervous about owning big bank stock, they use my money as they wish w/o it being backed up. I watch them daily.......like a hawk. I think one day I might go in and tell them to transfer the face value to my credit union.

[american-dolt]

11:44 AM on 11/09/2011

It's the way the Fascists work.

[madame48]

12:11 PM on 11/09/2011

truther...figures

[anti-fascist]

11:03 AM on 11/09/2011

Paul, it takes just ONE MAN in a high place to tell the truth about the Fascist takeover of the USA in broad daylight, and stop it. Since you seem to not object to being used by Obama , you ain't the one

Grow a set and speak up NOW!!!!! Or would you rather be the Colin Powell of Economics

[sjoberdix]

10:52 AM on 11/09/2011

Of course the rule is, then you have lobbyists writing the laws.

[whitemale08]

10:27 AM on 11/09/2011

...which is why Volcker should go on the crusade to restore Glass-Steagall.