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Breaking Up Large Financial Institutions is the Wrong Response to the Financial Crisis |
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Thursday, 29 April 2010 00:00 |
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“Most observers who study this believe that to try to break banks up into a lot of little pieces would hurt our ability to serve large companies and hurt the competitiveness of the United States…They believe that it would actually make us less stable, because the individual banks would be less diversified and, therefore, at greater risk of failing, because they wouldn’t have profits in one area to turn to when a different area got in trouble. And most observers believe that dealing with the simultaneous failure of many small institutions would actually generate more need for bailouts and reliance on taxpayers than the current economic environment.”
- Lawrence Summers, Director, National Economic Council,
PBS NewsHour with Jim Lehrer, April 22, 2010
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"Volcker Rule" is the Wrong Response to the Financial Crisis |
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Wednesday, 21 April 2010 00:00 |
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“If you look at the crisis, most of the losses that were material for the weak institutions – and the strong, relative to capital – did not come from those [proprietary trading] activities. They came overwhelmingly from what I think you can describe as classic extensions of credit.”
- Treasury Secretary Geithner, Sept. 10, 2009
On January 21st, President Obama announced a proposal that would ban commercial banking companies from engaging in proprietary trading, hedge fund, or private equity activities. The President called the proposal the “Volcker rule,” after former Federal Reserve Chairman Paul Volcker. More recently, Senator Blanche Lincoln (D-AR), Chairman of the Senate Agriculture Committee, has passed out of the Committee legislation that would require banking companies to divest of their derivatives trading businesses.
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ForumBlog's Regulatory Reform Update |
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Monday, 19 April 2010 00:00 |
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On March 22, the Senate Banking Committee passed the Restoring American Financial Stability Act on a party-line vote of 13 to 10. Despite the partisan vote, Chairman Chris Dodd (D-CT) and Ranking Member Richard Shelby (R-AL) said they will continue to negotiate with the hope of achieving a truly bipartisan bill.
Notable aspects of the Committee-passed bill include the creation of a Financial Stability Oversight Council (FSOC), designation of the Federal Reserve as the supervisor of the nation’s largest financial institutions, creation of a Consumer Financial Protection Bureau within the Fed, creation of a $50 billion pre-funded resolution authority for failing financial firms, and the regulation of the over-the-counter derivatives market.
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ForumBlog's Regulatory Reform Update |
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Friday, 19 February 2010 09:36 |
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This past week produced three important developments in the area of financial regulatory reform:
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ForumBlog's Commentary on Proposals to Limit Bank Size and Activities |
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Thursday, 04 February 2010 00:00 |
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President Obama recently announced a new proposal that seeks to limit the size and activities of financial institutions. The President called the proposal the “Volcker Rule” after former Federal Reserve Chairman Paul Volcker, who has called for separating commercial banking and proprietary trading activities.
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