You can – but shouldn’t – read some overheated complaints about how bankster lobbying weakened the Volcker Rule from I guess its platonic form of “anyone who does anything that, in hindsight, looks sort of like prop trading, will be shot.”* One problem with that is that it rests on a somewhat crude theory of lobbying, as just going to a regulator and saying “I want you to do X because it is good for banks and look I am holding a bag with a $ sign on it how about that.” In fact though effective lobbying by a bank involves (1) good arguments, and (2) because everyone just hates banks, reiteration of those arguments by sympathetic non-bank supporters.
This Bloomberg article is probably my favorite Volcker Rule story yet:
U.S. banks pushed regulators to widen proposed restrictions on trading and hedge-fund ownership by foreign firms, then encouraged governments around the world to complain about the rule’s reach.
The two-pronged lobbying strategy resulted in foreign officials joining U.S. lenders to push back against the Volcker rule, named after former Federal Reserve Chairman Paul A. Volcker and incorporated in the 2010 Dodd-Frank Act.
It’s so good! Step one: appeal to patriotism to convince US regulators that any Volckery needs to apply to foreign banks so that Jamie Dimon doesn’t have to like decamp for Sealand or whatever. This is a reasonably good argument, in that there’s no particular reason that US rules should weaken the competitiveness of US banks when they can be applied more universally. Step two: appeal to foreign governments to convince US regulators that the application of Volcker to foreign banks, and to trading in government securities (except US Treasuries!), will drive up their financing costs at exactly the wrong time. These are … well, they’re plausibly sympathetic supporters, anyway. Read more »