The Volcker Rule Is Great Public Policy!

The powerful people in America that run on irresponsible greed and who are the types that played a big part in bringing the world the 2008/2009 Great Recession are back at it again with their effort to water down if not eliminate the "Volcker" Rule from the Dodd-Frank legislation. These people seem to not only have their tenticles into the elected officials in Washington but also in the media. What is really interesting in the media since the Trump administration took over from the Obama administration the media doesn't even like to be clear about the good role the Volcker rule plays. Today, the media will say things like the Volcker rule bars banks from trading unless on their customers behalf. The media needs to stop clouding the issue because clouding it will help these people destroy the protections this provision of the law provides. The Volcker rule prohibits banks from making speculative investments, it's a great law that should not be repealed or rolled back because overall it protects our banking industry which is a tremendous asset of America.



The Volcker rule has many good ramifications one being that it would restrict banks from creating these big bond portfolios that the America people saw in 2008 and 2009 the banks possess so that when the real estate market tanked many of these bonds lost a huge portion of their value harming the capital status of these banks causing the stock value of these banks to fall precipitously and putting the survival of many of these banks in jeopardy. The Volcker rule obviously restricts banks from building up a large portfolio of investments in non-bank entities ownership in a multitude of different types of businesses that private equity and hedge funds could offer as well as their own investment pursuits could provide; this is good for the U.S. economy because it provides stability in the economy and protects the economy because the nature of banks work is risky they loan money they provide hedge protections of varied types and it is foreseeable that individual and groups of banks could get into financial trouble where situations in the economy and their risk status cause them losses and such losses could rise to the level where they would have to firesale and/or massively and quickly make financial cuts in the businesses they own and if these banks owned huge business portfolio because the Volcker rule wasn't in effect it could cause very harmful wakes throughout the U.S. economy. Plus these speculative investment could lose value themselves and thereby hurt the capital cushion of the owning bank which could have serious consequences on the banking activity of the owning bank.



No doubt the Volcker rule presents challenges in implementing and good ancillary rules need to be developed they have been and the work needs to be finished and fine tuned. Don't throw out this great protection because sometimes it is hard to implement. Most noteworthy the Volcker rule rightly allows banks to hedge their risk and the rules allowing this should be written and enforced with an emphasis of allowing banks to do what they classify as hedging government officials and elected officials need to remember the good principle behind the rule is that the American people want to protect the economy against instability caused by bank speculative activity those in authority shouldn't worry about limited amounts of bank activity that may cross over into speculative activity this type of activity isn't going to put the economy at significant risk people in authority shouldn't be doing anything close to splitting hairs because that just plays into the hands of people that want to repeal the law and return America to a casino capitalism environment. To this end, I think one of the tussles between banks and regulators is how large to let banks grow their bond and stock portfolios and the like. Banks legitimately acquire these securities through market making activity and through offerings, etc.. I am not a banking expert so I don't know the specific solution but in accord with the principle that splitting hairs is not the objective the objective is to protect banks stability put in jeopardy by speculative investing certainly reasonable standards on turnover of such securities and limits on how much of a banks capital is permitted tied up with the ownership of these securities would uphold this principle. Many significant changes need to be made about Dodd-Frank the law over did it but not in the area of the Volcker rule this rule was and is great public policy!

 

Rather than the government deciding this issue, I say let customers decide. If a bank customer doesn't want his bank to invest in bonds, then the customer can put his money in a bank that doesn't do so. Problem solved.

 

What we need is to have Glass-Steagall brought back.
Canada has sane banking rules and came thru the 2008 crash in very good shape.

 

There are fewer and fewer banks - the "too big to fail" SOBs are even BIGGER now.
Government is the only check on unbridled greed and gambling - the 2008 crash was essentially a repeat of the earlier "savings and loan" crash - high-risk loans and banks "gambling".

 

We should (slowly and gradually) eliminate all the regulations on banks AS WELL AS all special protections. Then they could gamble all they want, and they would have to bear the full consequences.

 

Except the there is the FDIC that insures our deposits - if banks gamble and lose, WE PAY.

 

Should be eliminated.

Should not be anyone's problem is bank loses it's gambles. Only the bank and those foolish enough to give the bank their money.

 

"Foolish enough to give the bank their money"????
Put it under the mattress??
That is a dumb answer.
Why not have government control?

 

Why not? Because government control and special privileges for banks gave us the great recession and every other financial crisis.

Customer can, if they wish, give their money to a bank that doesn't use depositor money to buy risky assets. Problem solved.

 

Dodd-Frank is a scam. You want to solve the problem? Repeal Dodd-Frank and all its associated crap and reinstate Glass Steagall. Separate commercial banking from investment banking, don't allow a bank to do both under any circumstances. Simple, easy. Bu that's not the purpose of the govt, it needs complexity like Dodd-Frank to hide its theft from the people.

 

The easing of government controls - as in killing of Glass-Steagall - allowing the banks to gamble freely is what caused the crash.

 

that is 100% wrong. Neither Glass nor Volker Rule would have prevented housing crisis. Look it up and get some evidence before you guess like that.

Econ 101 class one, day one: when you have 132 liberal govt programs to get people into homes the Republican free market said they could not afford you dont have freedom and capitalism. When the Fed is stimulating the economy by printing enough money to cause a huge bubble, when Fan/Fred is buying or guaranteeing 75% of the subprime and Alt A mortgages, and when the Greenspan Put promises to never let
housing prices fall you don't have anything close to freedom and capitalism what you have is libcommieism.

Would Silicon Valley fail instead of lead the world if our lib commies managed it? Of course it would!!

You need to start all over. Sorry to rock your world

 

No. Fractional reserve lending, encouraged by banking regulations, and FDIC Insurance is what caused the crash.

If banks didn't lend out depositors checking and savings money, a bank crash would effect one group only: the bank's shareholders. Nobody would care. The bank would go bankrupt, and the creditors would become the owners. The fact that regulations allow banks to invest depositor money in risky assets is what makes a bank failure a problem for ordinary people.

 

1) always been combined in Europe
2) had nothing to do with housing crisis anyway.

 

???regulations also allow FDIC so ordinary people have little to worry about.

 

Econ 101 class one, day one: when you have 132 liberal govt programs to get people into homes the Republican free market said they could not afford you dont have freedom and capitalism. When the Fed is stimulating the economy by printing enough money to cause a huge bubble, when Fan/Fred is buying or guaranteeing 75% of the subprime and Alt A mortgages, and when the Greenspan Put promises to never let
housing prices fall you don't have anything close to freedom and capitalism what you have is libcommieism.

Would Silicon Valley fail instead of lead the world if our lib commies managed it? Of course it would!!
.[/QUOTE]

 

You are proving my point.

 

The FDIC encourages depositors to deposit their money in banks that engage in fractional reserve banking. The FDIC simply transfers the risk from the depositor to the government. The regulations that encourage fractional reserve banking create the underlying problem.

If banks kept deposits safe, rather than investing them in risky vehicles, the FDIC would not be necessary and depositors would never be at risk of a bank becoming insolvent. The only people at risk would be the bank owners, and when they screwed up, their creditors would take over the business, just as in any other bankruptcy.

The fact that there are special regulations that protect banks from the results of their risky behavior is the cause of crises such as we had in 2008.

 

Is your point that the regulation permitting fractional reserve banking should be eliminated? If so I totally agree.

 

I am not supporting any of the regulations you cited. But I also don't support the regulation that allows banks to invest depositor money.

Depositors put money in a bank for safekeeping and so that they can write checks on it. When banks use depositor funds to invest for their own profit, they are putting their depositors at risk. Regulations allowing this should be eliminated.

 

what on earth? Banks should do what they please with depositors money so as to earn the biggest return for depositor customers, as long as they tell customers what they are doing. The customers should decide what risk and interest rate they want and thus what bank to use.

 

free banking is always fractional reserve so a bank can lent out deposits and earn depositors a return on their investment.

 

So you're saying that depositors should be responsible for the risks they take? I'm fine with that. So when a bank goes insolvent, the customers get no government money, because they chose to take the risk and they alone should bear the responsibility. Hence, there should be no mandated FDIC.

A very Republican position, and I totally agree with it.

 

And anyone who makes an investment should accept both the gains and the losses from their investment decisions. Thus, the depositor should bear the sole responsibility for his investment choices, not the government.

 

actually if the FDIC bails out a depositor it does not bail out the bank too. Usually that bank will go bankrupt.