The Volcker Rule is Born

Obama has just introduced what we’re calling the Volcker Rule.  This will prohibit banks from owning hedge funds, engaging in most prop trading and generally stop bank affiliates from taking on risk involving FDIC-backed deposits.  It sounds tres Glass-Steagally to me. 

The stocks of GS, JPM, BAC etc are all getting prison-raped on the news.

I’ll add details as I read them and post links below:


A bunch of links:

The End of Wall Street As We Know It (Newsweek)

New Regulation Aimed at Taking Profitablity from Goldman (Clusterstock)

Obama is Killing America by Killing Wall Street (WSJ)

Here’s The Fly on iBankCoin:

You do not overhaul the entire financial industry in less than one year after the greatest credit crisis since the exorbitant days of the late Roman Empire. I don’t know what else to say, other than “wow.” They are removed from reality and need to be voted out, before they do some damage we can’t walk away from.

You do not declare edicts, in the midst of a tenuous recovery. The stock market has been the primary source of hope for this country. If the government f&*%s that up, you can bank on a double dip.


Dumbass Government (iBankCoin)

Here’s John Carney on Merrill Lynch possibly being bought away from Bank of America by insiders:

Several senior financial executives are exploring the possibility of making a bid for Merrill Lynch. There has been increasing chatter about the possibility of a spin-off in recent weeks. But today’s announcement of new financial regulations that would rebuild the Glass-Steagal era wall between banking and trading has created a new sense of urgency and opportunity.


Wall Street Big Shots Moving To Buy Merrill Lynch Out From Bank Of America (Clusterstock)

Here’s John Gapper on FT Alphaville:

Before Barack Obama said anything today about his second Glass-Steagall, the story was evident from who stood next to him, and who was banished down the row of public officials.

To President Obama’s right was “this big guy”, the 6′ 7″ Paul Volcker, who has until today been a lone voice in his administration calling for structural reform on Wall Street. Further along was Tim Geitner, the Treasury secretary, who has until now resisted it in favour of tighter regulation.

If Mr Obama is serious, as he appears to be, he is enacting a reform that will strike at the heart of Goldman Sachs’ business model – a combination of advisory, financing and asset management, and co-investing of its own money alongside that of clients.


Paul Volcker towers over the new Glass-Steagall (FT)