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Volcker Rule Under Attack


Parsad
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I'm sure Charlie Munger will be none too pleased with the compromises being made to toughen financial industry rules.  It looks like compromises will have to be made to the Volcker Rule of forcing banks to restrict trading and investments in hedge funds.  Personally I like the rule and would like it to pass as is, but that won't be the way it will go I guess.  Cheers!

 

http://www.bloomberg.com/news/2010-06-23/volcker-rule-under-attack-as-lawmakers-seek-hedge-fund-loophole.html

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Its funny as now the 'investment banks' are bank holding companies in which FDIC provides them security to their creditors.

They've been trading for decades, but it only blew up when leverage ratios skyrocketed.

 

Bring back the Net Capital Rule and forget all the silly over regulation.  The markets have already taken care of the rest.

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How "ironic".

 

They were against government interventions before the 2008 crisis.

They were asking for government interventions in the middle of the crisis.

They are now back to "Go".

 

It sounds like a child who wanted to play with the BBQ alone without any parent restriction, then burned himself and cried for care and now want to have full access to the /$%/% BBQ again!

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How funny thinking of Hank Paulson and the rest begging to get 5 billion dollar firms excluded

from the Net Capital Rule.

 

Leverage ratios which were limited to 10 to 1 shot up to 33 to 1 (Lehman) and 40 to 1 (Bear)

though Fannie/Freddie were probably rolling around 50-60 to 1 as well.

 

People must be knowledgable and know whether they're giving an Investment Bank (Errrrr Hedge fund)

capital or a true bank/investment advisory firm.  They should require higher interest on capital allocated

to aggressive firms that trade on their own account.  Now FDIC is backing up creditors to Goldman and Morgan.

 

What a shame!  Moral Hazard galore...

 

 

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How "ironic".

 

They were against government interventions before the 2008 crisis.

They were asking for government interventions in the middle of the crisis.

They are now back to "Go".

 

It sounds like a child who wanted to play with the BBQ alone without any parent restriction, then burned himself and cried for care and now want to have full access to the /$%/% BBQ again!

 

This is whats funny to me. People claim to want free markets but cant see that this market isnt and cant be free. It just doesn't work. When things go bad the Government is always forced to step in.

 

As Stiglitz says there are 2 types of Countries in this world. Those that have a Government guarantee of Finance and know it, and those that do but dont know it. Ask Iceland.

 

Also I cant blame those guys, its what any of us would do. I have rarely seen anyone fall on their sword due to principles. The quote we are all Keynesians now rings a bell. Now the Politicians arguing for "free markets" at this point in the game sort of disgust me. At best they are Corporatist (I prefer Corporate Cronies), far different from Capitalist.

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Guest FFHfan

Charlie Munger on Banks and Derivatives

 

http://www.youtube.com/watch?v=2M3a2j-jHIs

 

 

How "ironic".

 

They were against government interventions before the 2008 crisis.

They were asking for government interventions in the middle of the crisis.

They are now back to "Go".

 

It sounds like a child who wanted to play with the BBQ alone without any parent restriction, then burned himself and cried for care and now want to have full access to the /$%/% BBQ again!

 

This is whats funny to me. People claim to want free markets but cant see that this market isnt and cant be free. It just doesn't work. When things go bad the Government is always forced to step in.

 

As Stiglitz says there are 2 types of Countries in this world. Those that have a Government guarantee of Finance and know it, and those that do but dont know it. Ask Iceland.

 

Also I cant blame those guys, its what any of us would do. I have rarely seen anyone fall on their sword due to principles. The quote we are all Keynesians now rings a bell. Now the Politicians arguing for "free markets" at this point in the game sort of disgust me. At best they are Corporatist (I prefer Corporate Cronies), far different from Capitalist.

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