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December 20, 2012

Last-Ditch Attempt to Derail Volcker Rule

In a desperate attempt to prevent implementation of the Volcker Rule, representatives of megabanks are resorting to some last-minute scare tactics. Specifically, they assert that the Volcker Rule, which is designed to reduce the risks that such banks can take, violates the international trade obligations of the United States and would offend other member nations of the Group of 20. This is false and should be brushed aside by the relevant authorities.

The Volcker Rule was adopted as part of the Dodd-Frank financial reform legislation in 2010. The legislative intent was, at the suggestion of Paul A. Volcker (the former chairman of the Federal Reserve Board of Governors), to limit the kinds of risk-taking that very large banks could undertake. In particular, the banks are supposed to be severely limited in terms of the proprietary bets that they can make, to lower the probability they can ruin themselves and inflict great damage on the rest of society. (For a primer and great insights, see this commentary by Alexis Goldstein, a leader of Occupy the S.E.C.)”

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Read Simon Johnson’s full post here

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