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Regulators Vote to Back Volcker Rule
WSJ ^ | 10 Dec 2013 | Scott Patterson, Shayndi Raice, Katy Burne

Posted on 12/10/2013 11:18:58 AM PST by oblomov

Edited on 12/10/2013 11:20:11 AM PST by Admin Moderator. [history]

WASHINGTON—All five regulatory agencies put to a vote and approved the Volcker rule on Tuesday, ushering in a new era of tough oversight that drills to the core of Wall Street's profitable markets and trading businesses.

The rule will put in place new hurdles for banks that buy and sell securities on behalf of clients, known as market making, and will restrict compensation arrangements that encourage risky trading. The Fed also approved an extension to give banks until July 2015 to comply with the rule, though firms will be expected to make "good faith" efforts to get into compliance earlier.


(Excerpt) Read more at online.wsj.com ...


TOPICS: Breaking News; Business/Economy; News/Current Events
KEYWORDS: doddfrank; doodfrank; finance; idiocy; laotse; lunacy; stupidity; volcker
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Headline should read: Regulators Vote to Expand Their Own Power
1 posted on 12/10/2013 11:18:58 AM PST by oblomov
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To: oblomov

I’d rewrite the headline to read “Regulators Once Again Think They are Smarter Traders Than the Weasels Who’ve Been Doing it for 35 years and who have Guaranteed Immunity Against any Type of Financial Fraud”.


2 posted on 12/10/2013 11:27:18 AM PST by Attention Surplus Disorder (At no time was the Obama administration aware of what the Obama administration was doing)
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To: oblomov

I’d rewrite the headline to read: Goldman Sachs is Pissed!

That actually makes me happy.


3 posted on 12/10/2013 11:28:38 AM PST by green iguana
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To: green iguana

There are good, common sense reasons to adopt something like the Volcker Rule.

But it should be duly passed by the Congress. Not imposed by fiat by unelected bureaucrats.


4 posted on 12/10/2013 11:42:03 AM PST by Buckeye McFrog
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To: oblomov

They will just extend it again when the time comes. This rule does not do squat anyways. It is just a distraction from what should be done. To put back in place Glass-Steagall. If they had not repealed it then the entire 2007 crash could not have happened.


5 posted on 12/10/2013 11:45:13 AM PST by Revel
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To: Buckeye McFrog

I thought Congress gave authorization for the rule when they passed Dodd-Frank.


6 posted on 12/10/2013 11:46:53 AM PST by green iguana
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To: Buckeye McFrog

But unelected bureaucrats have done so much good for the world. Why, if it hadn’t been for unelected bureaucrats, the Soviet Union would never have collapsed under their weight.


7 posted on 12/10/2013 12:08:14 PM PST by Eleutheria5 (End the occupation. Annex today.)
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To: Revel

>>If they had not repealed it then the entire 2007 crash could not have happened.

Disagree. You think more regulation will solve our problems? What gives the government the legitimacy to regulate the financial industry anyway? Because five bureaucrats voted that they could?

Why not simply end all mortgage subsidies, and all implicit guarantees behind Fannie/Freddie and the rest of the financial system? The 2008 financial non-crisis was predicated by the expectation that the FedGov would not allow the bankruptcy of Lehman. The market was almost right...


8 posted on 12/10/2013 12:12:46 PM PST by oblomov
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To: oblomov

Marxism marches on unimpeded in Obamaland.......


9 posted on 12/10/2013 12:19:00 PM PST by Tzimisce
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To: Buckeye McFrog

Spot on.


10 posted on 12/10/2013 12:20:46 PM PST by 1010RD (First, Do No Harm)
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To: Revel

There is scant evidence that Glass-Steagal would have made a difference.


11 posted on 12/10/2013 12:21:31 PM PST by 1010RD (First, Do No Harm)
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To: oblomov

Regulatory agencies voting? They just implement the law already voted on by Congress. This is a slippery slope caused by delegating Congress’ legislative powers to the Executive Branch. Not good.


12 posted on 12/10/2013 12:22:33 PM PST by 1010RD (First, Do No Harm)
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To: oblomov

Perfect.


13 posted on 12/10/2013 12:23:13 PM PST by 1010RD (First, Do No Harm)
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To: Eleutheria5
But unelected bureaucrats have done so much good for the world. Why, if it hadn’t been for unelected bureaucrats, the Soviet Union would never have collapsed under their weight.

Reagan was the source of that collapse and he didn't violate our Constitution by ignoring the separation of powers to do so.

Or were you referencing he Soviet unelected bureaucrats? ;)
14 posted on 12/10/2013 12:35:35 PM PST by yorkiemom
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To: yorkiemom

Exactly. They made the USSR ripe for Reagan’s plucking.


15 posted on 12/10/2013 12:38:18 PM PST by Eleutheria5 (End the occupation. Annex today.)
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To: 1010RD

Glass-Steagal would have prevented the AIG mess, which is what really made the melt-down cause government intervention.

The government was content to allow Lehman to go down in flames. That roiled the commercial paper market something fierce, but the government was still content to sit on the sidelines.

When the AIG exposure came to light, however, then the government jumped in with both feet. And AIG was able to do the stupid-on-steroids that they did because of Glass-Steagal being removed.


16 posted on 12/10/2013 12:43:23 PM PST by NVDave
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To: NVDave

Without the implicit government backing of Fannie/Ferddie mortgages, AIG would never have been able to issue CDOs as they did.

We need to abandon “industrial policy” in the financial sphere...


17 posted on 12/10/2013 12:55:04 PM PST by oblomov
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To: oblomov
Why not simply end all mortgage subsidies, and all implicit guarantees behind Fannie/Freddie and the rest of the financial system?

I think NAR and homebuilders would be screaming bloody murder. They would be back to building cookie cutter houses and turning existing McMansions into multifamily housing..

18 posted on 12/10/2013 12:57:02 PM PST by EVO X
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To: NVDave

How would G-S have prevented the AIG default? It’s not clear to me.


19 posted on 12/10/2013 1:33:56 PM PST by 1010RD (First, Do No Harm)
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To: oblomov

I disagree with posters who say that this is a good rule, or common sense.
The rule prohibits banks from taking risks. It does not define what is risky, and what is not. You just can’t define that in a law.

Obviously, banks do not try to make losing risks.

The Volcker Rule allows banks to buy as much “sovereign debt” (government debt) as they wish. One might ask, is all sovereign debt not “risky”? How about Greek bonds?

This is the sort of rule that one would expect from a government which does not even understand what is meant by insurance.

The way to handle the banking problem is to let banks who make foolish investments fail. Instead, the government has bailed out some, but not others, and demanded that all the surviving banks agree to take government supervision. Heck, it was government pressure which caused the housing crisis in the first place, but then the banks were blamed. The most careful banks were then taken to courts and shaken down for billions of dollars in fines, as if they (the careful ones) had done something wrong.

This is the government who pretends that a simple rule (“don’t act risky”) will solve everything, as if bankers don”t know something about risk.

Millennia ago Lao tse is said to have spoken thus: “The greater the number of laws, the greater the number of thieves and brigands.” We know where the laws are origination, and that the thieves and brigands are not far away.

There is no law which can tell you what is risky and what is not. This rule is just an excuse for taking to court and shaking down any bank which happens to lose money. So, how likely is it that banks will give loans to investors in new innovations? That would be “risky”! But if they buy government bonds, that is “not risky.” At least, but buying only government bonds, the banks diminish the risk of being attacked by the government. Thus all the capital will be diverted (as most of it already is) into covering government debt, and perpetuating the inflation machine. We will be increasing our diet of seed grain.

When I consider moves like this, I really see no way out, and no way to avoid a disaster. The only investment that considered safe by the regulators, will be in government bonds. The only way to build new plants, especially innovative ones (and innovation is always “risky”) would be to get government grants. Welcome to the socialist future.


20 posted on 12/10/2013 1:41:44 PM PST by docbnj
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