Distinguishing himself as Obama's point man on Wall Street reform, Paul Volcker called
for aggressive structural changes in the financial sector in Sunday's
New York Times. The former Fed chair argued for separating big banks
from their risky speculative investment operations. He also called for
improved regulation and capital requirements. These are all necessary
steps to prevent another collapse, writes Volcker. "We need to face up
to needed structural changes, and place
them into law. To do less will simply mean ultimate failure—failure to
accept responsibility for learning from the lessons of the past and
anticipating the needs of the future." How's the column being received?
Here's what business writers and econo-bloggers are saying:
- Volker Has Thrown Down the Gauntlet, writes Prairie Weather:
"Deep structural change is unavoidable. Can't you just hear the screams
of agony from the opposition and from Wall Street? Watch for the
markets, Wall Street lobbyists, and profiteers in the Senate -- like
the wives of the powerful during the revolution -- faint at the sight
of the guillotine! ...The guillotine is under construction. Prepare
for battle over its use."
- Doesn't Go Far Enough, insists Yves Smith at Naked Capitalism: "While Volcker does speak of the need for structural reform, which is
absolutely necessary, his outline does not go anywhere near far enough
to start defusing the bomb that financial services deregulation managed
to create...The unintended message of Volcker’s op ed may be that even someone as
tough-minded as he is may not recognize the magnitude of structural
change needed to limit the extent of government guarantees to the
financial sector and contain officially-backstopped risk-taking."
- Pretty Good Overall, writes Stephen Glain
at The National: "The point of Mr Volker’s initiative, however, is not
so much to
eradicate risk as to smash the oligarchy that dominates Wall Street
more than a year after it required hundreds of billions of dollars in
taxpayer funds to stay afloat... However imperfect, the Volcker rule
would do much to restore a measure of restraint on Wall Street."
- Is Volcker the New Geithner? Henry Blodget
at The Business Insider suspects Obama has sidelined Tim Geithner: "By
choosing someone else to sell the plan, the Obama administration is
sending the message that someone else (Volcker) is responsible for it.
This means the administration is [likely] benching Tim Geithner and
taking a new harder line against Wall
Street...but waiting a bit to carry out the formal execution, so as to
avoid embarrassing the President for supporting Geithner for so long."
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