Volcker makes his move

By Felix Salmon
January 21, 2010
teaser in the WSJ about a big announcement from Barack Obama tomorrow sounds almost too good to be true. A cap on the size of financial institutions! A ban on risky investments in things like hedge funds and private equity! A real wall between commercial banking and speculative prop trading!

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Dare I hope? The teaser in the WSJ about a big announcement from Barack Obama tomorrow sounds almost too good to be true. A cap on the size of financial institutions! A ban on risky investments in things like hedge funds and private equity! A real wall between commercial banking and speculative prop trading!

The banks of course will scream blue murder, while at the same time trying to say that those kind of walls exist already. But they can’t have it both ways. I’m also fascinated by the fact that Paul Volcker’s fingerprints are all over this announcement, while the names of Larry Summers and Tim Geithner are nowhere to be seen. Has Volcker done some kind of an end-run round Summers while no one noticed? I guess that things will come into more focus tomorrow. I, for one, can’t wait.

4 comments

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Nate Silver actually predicted that the Dems would pick up a fight with the banks in 2010.

It might be a good strategy. It sure constitutes a formidable standard to rally your troops around in an election year. Also, you don’t want to fight the banks unless you have to. Obama probably waited one year to gauge if popular anger had died down. The humiliating defeat in Massachusetts clearly showed the rage is still here.

As Simon Johnson says, the Dems now have to force the Reps to state which side they’re on:
http://baselinescenario.com/2010/01/20/p aul-volcker-prevails/

Posted by EmilianoZ | Report as abusive

Gee, Felix, were you on Mars Tuesday? Did you not hear the shocker in Massachusetts (double-checked my spelling :D)?!

The President has finally realized (or so I hope) how angry, I mean raging-mad angry, ordinary people (including ‘bleeding heart’ liberals like myself) are about the unfairness of it all – bank bailout, huge bonuses bankers are awarding themselves, the brisk businesses lobbyists have been doing, the generous concessions given away to industries, the revolving door between lobbying and politicians and their staffers, …

He doesn’t need to be a populist to be a great president; in fact, I’d rather he makes good policy than pandering to voters. But there’s nothing wrong in aligning himself with the majority of the country and be mad at corporate excess.

His agenda seems to be, to put it simply, to moderate corporate behavior so their long-term interests are more aligned with the country’s. He’s really trying to save capitalism, by regulating it so it doesn’t gauge itself to death as we saw it almost did. He thought he could do that following Summers/Geithner’s school of economics, but now it turned out voters don’t think much of their ideas. So I say, good riddance to them, the sooner the better.

Posted by jian1312 | Report as abusive

I meant ‘gorge’.

Posted by jian1312 | Report as abusive

I hope the news is ‘Geithner’s gone’

Posted by MarkWolfinger | Report as abusive