subject: Volker the Populist..3 reasons to bring back Dr. Doom [print this page] If you are going to a Fox Hunt Don't dress like a Fox
In the 1980's Henry Kaufman , the Economist at Salomon Brothers, would say something and my ears would blow up as I stood outside the Treasure Bill Pit at the CMEyou could hear a roar build in the large room and no one knew any news..but when you checked thetape it was Henry Kaufman. No doubt every broker on the Salomanprop desk knew what he was going to say before he said it.
Paul Volker was the Fed Chair at the time so certainly he knew the risk prop desks were talking around the globe. The difference is that the market was making a historic bottom and any volume traded on the NYSE was welcome. This was actually the beginning of real trading using computer models and high speed trading. I was right in the middle of it working for Morgan Stanly doing Risk Arbitrage from the CME floor.
I would never guess that Paul would be here in the Obama Cabinet requesting trading desks not to take risks that would crater the economysince the events of 2008 Housing Crash prop desk's are gone and we have the Volker Rule regarding propietary trading and risk.
White House adviser Paul Volcker will urge Congress to curb the risks taken by large banks to help prevent them from being treated as "too big to fail," according to testimony . Detailing a recent proposal known as "the Volcker rule," the former Federal Reserve Chairman told lawmakers that commercial banks' proprietary and speculative activities should not be protected by the government.
He will also urge international consensus on "appropriate" actions to restrict commercial banks' activities. In his testimony, Volcker will say there are strong conflicts of interest inherent in participation by commercial banks in proprietary or private investment activity. "I am not so naive as to think that all potential conflicts can or should be expunged from banking or other businesses," Volcker said in his prepared remarks. "But neither am I so naive as to think that, even with the best efforts of boards and management, so-called Chinese walls can remain impermeable against the pressures to seek maximum profit and personal remuneration," he said.
Taken on board as an adviser early on by Obama, Volcker initially seemed to have not much of an impact in the administration. But that has changed since the Democrats lost a special Senate election in Massachusetts and Obama moved to a more populist stance, proposing new bank restrictions.
