In what I have considered a waste of time from the beginning with no chance of ever becoming law, the so-called Volcker Plan appears dead after questioning Senate Banking Committee found Volcker unable to answer key questions which should have been easy to answer if the plan was as good as it was suggested it would be.
For example, when asked the simple question of whether there was any evidence whatsoever that proprietary trading was a part of the economic crisis, Volcker essentially had no answer to that, which is one of the more obvious and important points if the Volcker Plan had even a small chance of being implemented.
Proprietary trading is when a financial institution uses its own money to trade and not depositors’ or other money.
Another major point which is pretty much agreed upon by all, is there is no way the Volcker Plan could work if it was only put in place in the United States, as it would seriously hamper the banking industry against its foreign competition who would otherwise operate without those restrictions placed upon them.
Probably Volckers’ worst moment was when it was asked as to how regulators would be able to measure “excessive growth,” to which Volcker had no answer other than to respond with an old saying of it being like “pornography, you know it when your see it.”
A number of Senators also noted that the timing of throwing the plan out when there was already a number of reforms being hashed out didn’t do anything to help it gain any support.
Sen. Christopher Dodd even described the plan or rule as “excessively ambitious,” whereas it could even derail all the reform currently on the table.
I’ve been cynical and suspicious about these from the moment it has been thrown out there. The chances of it ever being put into law was about zero from the beginning, so why was it even bothered with?
It could be a move by Obama to let it be seen as so unworkable and outrageous that some of the other regulation being proposed could look good in comparison to it. In other words, Volcker may have been a pawn from the beginning in all of this to position other legislation to be looked upon in a better light. The question is whether the 82-year-old Volcker was even aware of it if that was the case.
This may sound like conspiracy theory, but the truth is it never made sense in the way it was initiated, timing of it, and the content of the proposed rules themselves.
When something makes no sense, there’s something else going on, and usually it’s an attempt to get eyes looking in one direction while something else that is the real issue is being worked out in another. I think that’s what we’ll find out going forward, and Volcker was the perfect stooge to use as his age where it wouldn’t really hurt him much, as his place in history is pretty much secured.
