When the controversial Volcker Rule was placed inside the larger Dodd-Frank law, which was passed in 2010, Wall Street and the rest of the world of finance and economics were quite perturbed.
It prompted JPMorgan CEO Jamie Dimon to stand up and ask Fed chief Ben Bernanke during his press conference if anyone at the Fed or Treasury knew the impact of all these new rules.
The yet-to-be-implemented rule — named for past Fed Chair Paul Volcker, originally appointed by Jimmy Carter and later named by President Obama to an advisory role — has few fans.
The Volcker Rule was billed as a way to protect bank depositors from the banks’ own proprietary trading operations. However, it morphed into somewhat of a punitive attack on Wall Street.
As global economies struggle, it’s no surprise that last week the chairman of the UK’s Independent Commission on Banking (ICB) has recommended that the UK not try to implement the Volcker Rule or regulate proprietary trading.
Between the lines, London just hung out a big sign: “If you’re a global bank and you want proprietary trading to be a part of your operation, come to London — we want your business.”
Interestingly, in a speech last week, SEC Commissioner Daniel M. Gallagher, an Obama Republican appointee, said of the Volcker Rule that regulators “could be focusing on other matters rather than spinning their wheels with no end in sight.”
In the end, the Volcker Rule may die a slow death — buried by Washington as it’s come to realizethe rule may be much ado about nothing. There are very few who think it would help prevent a crisis, or stabilize banks in one, and it’s pretty unimplementable.
America can do better than the Volcker Rule. Fix it or take a mulligan on it. Let’s keep our nation’s stature as the world leader in banking and finance and keep jobs from leaving NY and going to London.