The 'Volcker Rule' got fresh support this morning when five former Treasury Secretaries endorsed the key financial regulation in a letter to the Wall Street Journal.
The ex-Treasury officials, who served both Republican and Democratic administrations, wrote that the reform measure, which would prohibit commercial banks from owning or investing in hedge funds, private equity funds or "proprietary trading" operations, is a reasonable trade for the benefits banks reap from "public support by means of access to the Federal Reserve and FDIC insurance."
And while the rule may not alone prevent the next financial crisis, they said it's a crucial part of a more expansive regulatory reform package:
"We fully understand that the restriction of proprietary activity by banks is only one element in comprehensive financial reform. It is, however, a key element in protecting our financial system and will assure that banks will give priority to their essential lending and depository responsibilities."
The former Treasury Secretaries join a number of prominent financial authorities who have lent support to Volcker's proposed bank reforms, including George Soros, John Reed, William Donaldson and John Bogle. The former officials who signed the WSJ letter are W. Michael Blumenthal, who served under President Jimmy Carter; Nicholas Brady, who was Treasury Secretary under Presidents Ronald Reagan and George H.W. Bush; Paul O'Neill who served under President George W. Bush; George Shultz, who worked for President Richard Nixon; and John Snow, who served under George W. Bush.