– The author is a Reuters Breakingviews columnist. The opinions expressed are his own –
By James Pethokoukis
WASHINGTON, Feb 15 (Reuters Breakingviews) – The much-hyped Volcker Rule proposal is failing fast in the U.S. Congress. Paul Volcker probably isn’t that surprised. The former Federal Reserve chairman joked he was “just a photo op”, even after President Barack Obama’s public embrace of his proposal to limit bank proprietary trading. The problem is that legislators are no longer interested in sweeping reform.
Any reform plan has to get through the U.S. Senate Banking Committee. Now that the mood of crisis has passed, Wall Street campaign contributions and Republican intransigence are paramount there. That means the new negotiating tag-team — Democrat Chris Dodd, the chairman, and Republican freshman Bob Corker — is not going to agree on anything radical. Corker says the Volcker Rule will not be a “major topic” for discussion, and that is probably OK with much of the committee.
Increasingly, the Volcker Rule looks more like a stunt than a viable solution. Though Volcker had been pushing it for months, the White House endorsement came as surprise to both the Banking Committee and banking industry. That is a poor way to introduce serious legislation in Washington.
Lame-duck Dodd sees reform as his legacy, so he wants a bill passed by early summer. His view: The Volcker Rule is a sudden and unwelcome complication.