Brian Moynihan Musters What's Left Of His Courage, Leads The Charge Against The Volcker Rule

Bank of America evidently lobbing the first major volley against Dodd-Frank.
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Like Germans before the fall of the Berlin Wall or French peasants in the Ancien Régime, big bank heads have been biding their time for years in humble patience, waiting for the opportunity to strike the first blow against what they know in their hearts to their greatest nemesis: the Volcker rule. But until now, Jamie Dimon, Lloyd Blankfein and crew have recognized that the time wasn't right; any attack they made would be met with a crushing counterblow from politicians and the media eager to paint big bad bankers as eager to usher in the next crisis by tearing down the rules constructed after the last one.

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There were little squeaks of annoyance as the rule was finalized, of course, but by the time it was a done deal executives publicly accepted it. “I don’t disagree with the intent of the Volcker Rule,” Dimon said in 2012. “It doesn’t look like a revenue impacting item in terms of the final rule,” was Harvey Schwartz's take. “That’s not a big part our company,” Bank of America's Brian Moynihan said.

But now the time has come to lead a charge, and Moynihan has gathered every measly scrap of pluck he can muster to become the unlikely face of the resistance. Someone has to be the first to square up, take aim and hurl the first battle cry. Why not the ever-moroseconstant underdog in charge of BofA?

OK, so Moynihan may not have trumpeted his challenge from the ramparts of the District of Columbia. Instead he took to the staid pages of Germany's leading business daily, Handelsblatt. “There is general agreement that we need to address the Volcker rule,” Moynihan told the paper. But that doesn't mean it's not a clarion call for his fellow bank heads to take up arms.

It's actually a wonder that more bulge-bracket CEOs haven't taken direct swipes at the rule, given the fact that the White House is now occupied by a guy whose regulatory guru is Carl Icahn. In interviews, Blankfein and Dimon have been cautious in their Dodd-Frank criticisms, lodging a set of agreeable-sounding complaints that in their bland generality tend to sound eerily similar. If the financial crisis taught these guys anything, it's reputation management, and their trepidation to leap into Trump's deregulatory bonanza seems as much about maintaining appearances as it does being prudent.

But BriMo is done with all that. It's time to let loose. Mr. Trump, tear down this rule.

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The Volcker Rule Will Come Too Late For Kaufman Bros.

If you're a more or less regular consumer of efficient markets hypothesis Kool-Aid then a fun activity is to handicap the probability of various public policy things based on market reaction.* So for instance Obama's budget is going to reduce the tax deductibility of munis! And the muni market didn't care! So, no, Obama is not going to reduce the tax deductibility of munis. You heard it here first, or last, or whatever. (Exercise for the reader: is Obama going to raise the tax rate on dividends?) Since today seems to be Volcker Day hangover it's worth pondering this: