JimofPennsylvan
Platinum Member
- Jun 6, 2007
- 859
- 500
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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 The Volcker rule prohibits banks from making speculative investments, it's a great law that should not be repealed or rolled back because overall it protects our banking industry which is a tremendous asset of America.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!
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!
