Thoughts? Opening reaction– disappointed in the lack of Blankfein shout-outs (especially since Gary Cohn canceled a lunch to make this thing) and not enough jokes.
Paul Volcker
The following post is by Dealbreaker reader and commenter Infinite Guest.
In his early experiments, Harry Harlow gave infant monkeys a choice between a chicken-wire “mother” who gave milk and a terrycloth “mother” who did not. Finding that the monkeys preferred the terrycloth mother, he concluded, contrary to conventional wisdom at the time, that the relationship of a primate infant with its mother rests more upon comfort than upon food. Dr. Harlow’s early experiments tested a clear hypothesis. They were controlled. They produced interesting results, useful to our understanding of human psychology. The early experiments influenced a generation of research psychologists and arguably changed the way we raise our children today. But Dr. Harlow didn’t stop there. For the next twenty years, he continued experimenting with monkeys. He tested their social development for progressively more abstract traits, under varying conditions of privation, progressively more severe. His later experiments comprised torturing monkeys as an end in itself. Continue reading »
The Volcker Rule -aka the euthanasia principle- got some fresh backers over the weekend, with five former Treasury secretaries sending a letter to the WSJ to voice their support. While this must be good news (late wedding gift?) for Paul, the former secretaries don’t add much to the initial argument. They’re just reiterating what Paul’s been saying from the start: This is just one component of a much broader picture, banks should not engage in speculative activity unrelated to essential bank services, prop trading is a bad, bad, thing. Right. Doesn’t do much to convince the haters.
In other news, today is National Margarita Day.
The Volcker Rule is not gaining popularity, with many people distancing themselves from the proposal- with Senator Dodd most recently saying the thing’s a bad idea. A source close to the matter tells us that now, chances for it to be enacted are getting very slim and that even Barney Frank is sort of, “not enthused” with it either. According to the source, Frank’s beef is that he doesn’t understand why the White House is making such a push, as regulators would have the authority to implement the proposed changes, and he’s questioning the necessity for Congress to revisit it. “It was s political move in the sense that the more you band against big banks, the more you help yourself politically. But they miscalculated on that one, ’cause it wont be beneficial for them in the end.”
The Volck-Man, who will testify later today before the Senate Banking Committee on his prop trading rule, would first and foremost like everyone to understand that the rule is part of a broader structural reform, which he summarizes elegantly this way: The idea is that a designated agency be provided authority to intervene and take control of a major financial institution on the brink of failure. The mandate is to arrange an orderly liquidation or merger. In other words, euthanasia not a rescue.
Yesterday, Time named Ben Bernanke Person of Year. This news didn’t sit right with country reporter Charlie Gasparino. Any old hobo would’ve been a better choice, but as luck would have it, Chaz has someone in particular in mind, who is more deserving of the award. And that, CG says, is Charlie Gasparino.
“It really helps people, it’s useful,” the former Federal Reserve Chief said today. So there’s that.
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