/EIN Presswire/ The President’s remarks this morning about financial reform could bring about a potential sea change. The meat of the remarks is contained in the following article:
It’s for these reasons that I’m proposing a simple and common-sense reform, which we’re calling the “Volcker Rule” — after this tall guy behind me. Banks will no longer be allowed to own, invest, or sponsor hedge funds, private equity funds, or proprietary trading operations for their own profit, unrelated to serving their customers. If financial firms want to trade for profit, that’s something they’re free to do. Indeed, doing so — responsibly — is a good thing for the markets and the economy. But these firms should not be allowed to run these hedge funds and private equities funds while running a bank backed by the American people.
If the administration manages to get this change through Congress it will mean that the speculation of the post Glass-Stiegle era will be over and for a long time. It will force the banks into becoming supporters of productive endeavors again. The investment banks will be able to continue their speculative trading, but the volumes will be smaller because these institutions will no longer be able to use the huge deposits sitting in banks for their speculative activities.
The implications of the “Volker Rule” are not altogether clear yet, but they will be immense. Politically it will boost President Obama’s standing. The likelihood of these rules no passing is small. The electorate hates the banks and any congressman supporting the banks will lose his seat in the next elections.
Hold on to your seats folks. It’s going to be a bumpy ride for the banks and the politicians.
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