Comments on: How Levin’s crisis report recasts the Volcker Rule http://blogs.reuters.com/felix-salmon/2011/04/14/how-levins-crisis-report-recasts-the-volcker-rule/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: thatash http://blogs.reuters.com/felix-salmon/2011/04/14/how-levins-crisis-report-recasts-the-volcker-rule/comment-page-1/#comment-25834 Fri, 15 Apr 2011 18:45:18 +0000 http://blogs.reuters.com/felix-salmon/?p=7937#comment-25834 Actually, the FCIC does have a website with report (http://fcic.law.stanford.edu/report). Since the commission does not exist anymore (and neither does their funding), the website has been archived by Stanford –http://tinyurl.com/3ro7867

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By: Than http://blogs.reuters.com/felix-salmon/2011/04/14/how-levins-crisis-report-recasts-the-volcker-rule/comment-page-1/#comment-25803 Thu, 14 Apr 2011 19:53:55 +0000 http://blogs.reuters.com/felix-salmon/?p=7937#comment-25803 “As I recall, the stated justification for the Volcker Rule…”

Clearly you didn’t pay attention to the Volcker Rule debate then. The inherent conflict-of-interest was always the stated justification, including Paul Volcker’s stated justification, for prohibiting prop trading. Levin’s report adds nothing to the debate. (In fact, Levin contributed a provision to the final Volcker Rule that everyone — other legislators, regulators, bankers, even Paul Volcker — admits is incoherent.)

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By: thispaceforsale http://blogs.reuters.com/felix-salmon/2011/04/14/how-levins-crisis-report-recasts-the-volcker-rule/comment-page-1/#comment-25802 Thu, 14 Apr 2011 19:40:44 +0000 http://blogs.reuters.com/felix-salmon/?p=7937#comment-25802 At the expense of one’s client is how the parasite thinks. Businesses have profitable transaction with clients, sometimes with a one-off, sometimes with a longterm setup, but always with an eye on longstanding relationships. Goldman can burn bridges with ACA or IKB because there are many other clients to profit at the expense of, as well as tacit government approval to the game. Small community businesses, whether car dealerships or restaurants cannot afford to function as parasites, perhaps because they are stronger moral creatures, but more probably because they would fail.

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By: bidrec http://blogs.reuters.com/felix-salmon/2011/04/14/how-levins-crisis-report-recasts-the-volcker-rule/comment-page-1/#comment-25801 Thu, 14 Apr 2011 19:39:19 +0000 http://blogs.reuters.com/felix-salmon/?p=7937#comment-25801 From a completely different angle: Into the ‘eighties Quotron, the market data company, offered a product called the “Restricted List”. If a firm was doing an investment banking deal with company then a flashing ‘R’ would appear on the quoteline after its symbol. This was to inform the trading part of the firm that trading in that securitiy was restricted.

This product was available only on the Quotron 800 product line and involved telephone lines from the computer upon which the restricted list was edited to the computers that displayed the flashing ‘R’. The 800 product line was programmed in assembler. Quote data came from a regional database which got it from SIAC who got it from the exchanges. The quote data was displayed on the bottom of the screen and the flashing ‘R’ was inserted after the symbol. Not so hard to do in assembler but almost impossible to do in Unix which treats everything as a file. The successor to the Quotron 800 was a Unix based machine. So far as I know the restricted-list product was dropped. There was no equivalent ‘easy’ way to maintain the Chinese wall across a firm.

Quotron was acquired by Reuters after a tortuous detour through CitiCorp so you–as a Reuters employee–might find that they now offer an equivalent product. I have left the industry.

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By: NCimon http://blogs.reuters.com/felix-salmon/2011/04/14/how-levins-crisis-report-recasts-the-volcker-rule/comment-page-1/#comment-25799 Thu, 14 Apr 2011 17:56:05 +0000 http://blogs.reuters.com/felix-salmon/?p=7937#comment-25799 Some realism, please. We had John Paulson working in concert with Goldman Sachs to create investments they both knew would fail. Goldman then actively touted those investments to its clients, even as both put enormous wagers against that trash. In no known universe does that make ethical sense, and in most of those systems the principles would be in jail.

So don’t give me that stuff about consenting adults. The metaphor strikes a little bit too close to home.

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By: AdamJ23 http://blogs.reuters.com/felix-salmon/2011/04/14/how-levins-crisis-report-recasts-the-volcker-rule/comment-page-1/#comment-25796 Thu, 14 Apr 2011 16:31:50 +0000 http://blogs.reuters.com/felix-salmon/?p=7937#comment-25796 y2kurtus- There are laws that protect you if a car dealer gives you a lemon or a restaurant gives you bad food- its I’m baffled how the financial services industry thinks different rules should apply to them.

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By: randymiller http://blogs.reuters.com/felix-salmon/2011/04/14/how-levins-crisis-report-recasts-the-volcker-rule/comment-page-1/#comment-25794 Thu, 14 Apr 2011 15:41:35 +0000 http://blogs.reuters.com/felix-salmon/?p=7937#comment-25794 The consenting adults defense does not work when one of the parties deliberately withholds pertinent information from the other party. That defense would only work if Goldman was compelled to completely open all its books to IKB for due diligence. Goldman could not do that, because so much of the pertinent information is privileged information. Does anyone really think a “Chinese Wall” really keeps privileged information from being shared between bankers and investors?

Think about this. In OurBank, we have a banker side and a prop trader side. One of the prop traders is making a deal, and one of the bankers has inside information that the deal will be a disaster large enough to bankrupt the whole enterprise, and throw him out of a job. Does anyone really believe that banker is going to stand by and say nothing to the trader?

Econ 101 assumes both parties to a transaction have “perfect information”. That never happens in the real world.

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By: y2kurtus http://blogs.reuters.com/felix-salmon/2011/04/14/how-levins-crisis-report-recasts-the-volcker-rule/comment-page-1/#comment-25793 Thu, 14 Apr 2011 15:36:44 +0000 http://blogs.reuters.com/felix-salmon/?p=7937#comment-25793 “Is an investment bank profiting at the expense of its clients?”

Lets explore that premise by substuting a different industry for investment bank…

Is a car dealership profiting at the expence of it’s clients?

Is a restruant profiting at the expense of it’s diners?

Is an airline profiting at the expense of its passengers? -O.K. that’s actually a bad example since they preputally lose money… but you get the drift right?

All profitable businesses generate their profits via their customers.

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By: LadyGodiva http://blogs.reuters.com/felix-salmon/2011/04/14/how-levins-crisis-report-recasts-the-volcker-rule/comment-page-1/#comment-25790 Thu, 14 Apr 2011 14:51:18 +0000 http://blogs.reuters.com/felix-salmon/?p=7937#comment-25790 Is it just me, or did it occur to anyone else that the main purpose of Obama’s speech yesterday was to push Senator Levin’s report to page three, below the fold?

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By: Curmudgeon http://blogs.reuters.com/felix-salmon/2011/04/14/how-levins-crisis-report-recasts-the-volcker-rule/comment-page-1/#comment-25787 Thu, 14 Apr 2011 14:22:36 +0000 http://blogs.reuters.com/felix-salmon/?p=7937#comment-25787 You are almost certainly going to get comments from those who will say that both the investment banks and their institutional clients are consenting adults, and should be able to do whatever they want, irrespective of this thing you call ethics.

However, at some fundamental level, our entire financial system is based on trust. It’s not merely trust in the government, but also a hard and definable level of trust among counterparties in any exchange. If that is irretrievably lost, I do not hold out hope for the future of society in general.

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