In what looks like a last ditch effort to bring the dead ‘Volcker Rule’ back to life, the government keeps parading out the former Federal Reserve chairman in attempts to keep it as part of the conversation, the most recent time associating his proposals with Goldman Sachs (NYSE:GS) in a disingenuous move to gain approval using the somewhat negative perception of the bank holding company in order to garner support and favor with the general public and some politicians, who have been less than supportive, or even interested in what the ‘Volker Rule’ says.
Volcker, who is ahead of Obama’s Economic Recovery Advisory Board, has been trying to fight through the irrelevance of his proposals in attempts to get some footing in the regulatory game, but has largely failed.
This looks like his last big push, using about the only tool left to him to even gain some interest in what he is saying, let alone the proposals themselves.
Most feel this is far too late in the regulatory process to be considered, and really doesn’t add much more than has already been thrown out there as possibilities.
For the most part this is just a backdoor way of reinstating the Glass-Steagall act without saying that’s what is being done, by separating proprietary banking from commercial banking. Proprietary banking is when banks use their own money rather than the money of others to make their trades.
While basically only talking to himself, Volcker is attempting to give the impression there is a serious conversation going on concerning his proposal, of which Goldman Sachs and others believe wouldn’t force them to separate those banking practices even it the ‘rule’ was implemented.
In a strange assertion, the Financial Times concluded this about Volcker Rule, after a recent video interview with Volcker: “Markets are wondering how the rule would affect groups such as Goldman Sachs and JPMorgan Chase, which have proprietary trading desks and private equity units. The two groups also enjoy financial holding company status and the consequent right to borrow money from the Federal Reserve and accept retail deposits.”
I say this is strange because I’m not aware of anyone in the markets even thinking much – if any – on the Volcker Rule, which has been dismissed by politicians and financial institutions as well. What markets are the Financial Times referring to then, since there aren’t any even taking any of it seriously.
As I mentioned, why are we even talking about the Volcker Rule in this way as if there are concerns from Goldman Sachs directly, when other than being aware of it being proposed, it’s largely already in the past and now other real issues being weighed are being focused on.
