Volcker Proposes Separating Commercial and Investment Banks

Discussion in 'Wall St. News' started by ASusilovic, Mar 6, 2009.

  1. Commercial banks should be separated from investment banks in order to avoid another crisis like the U.S. is now experiencing, according to former Federal Reserve Chairman Paul Volcker.

    “Maybe we ought to have a kind of two-tier financial system,” Volcker, who heads President Barack Obama’s Economic Recovery Advisory Board, said today at a conference at New York University’s Stern School of Business.

    Commercial banks would provide customers with depositary services and access to credit and would be highly regulated, while securities firms would have the freedom to take on more risk and practice trading, “relatively free of regulation,” said Volcker.

    Volcker also said international regulations on financial firms are probably an inevitable consequence of the sector’s current problems.

    “In this world I don’t see how we can avoid international consistency” on securities regulations going forward, he said. “The U.S. is no longer in a position to dictate that the world does it according to the way we’ve done it.”

    Volcker, who ran the Fed from 1979 to 1987, said the financial industry’s problems stem from larger issues. “I don’t think this is just a technical problem, it’s a societal problem,” he said. He cited bankers on Wall Street receiving multimillion-dollar bonuses for engineering failed mergers.

    “There’s something wrong with the system,” Volcker said. “What are the incentives, what’s going on here?”

  2. Volcker is spot on....

    Summers and Geithner....

    Are Summers and Geithner....

    This would best fit the US....

    As in any great company....The best set of partners....

    One is very creative....one is very conservative....

    Together they move mountains....1+1=1000

    By themselves. they wither and die....1+1=0


    This will reinstate confidence worldwide....

    Summers and Geithner are permanently out to lunch....
  3. Brilliant! If only someone had thought of this before! Paging mssrs. Glass & Steagall.
  4. No SHIT! If the banks are so important and "too big/important to allow to fail", then they should be restricted from taking STUPID ASS RISKS!!
  5. Daal


    Yeah because BSC LEH MER MS GS did so well without a stable deposit funding base and full access to the fed window. Blaming glass steagal repeal is typical of the society blame mentality
  6. Kinda like how your boy Obama can't stop blaming Bush? When Bush took over from Clinton, you never ONCE heard GW blame Clinton for the Interent Bubble busrt and ensuing recession. He went to work. When 9/11 happened, you never once heard Bush blame Clinton for the reduction in military & intelligence spending which was largely to blame. If BHO and his team of monkeys would just STFU and go to work, we'd all be much better off. How's that for "society blame mentality"?

    Also, is Volcker himself not advocating exactly what Glass steagall was? How is that "blaming" anyone?

    P.S. the brokerages you mention ALL have custodian banks who are supposed to keep brokerage/ banking funds segregated. Out of the 5 you mentioned, 2 have failed, 1 was bought out, 2 surviving on their own (all with TARP money). The true problem is with BA, C, UBS, USB, WFC, who have co-mingled grandma's checking account with CMBS sub-prime dogshit. Get a clue.
  7. Daal


    lol, I dont get where you got the impression I'm a obama supporter out of my opinion. Everybody drank from the punchbowl during the credit/housing boom, glass steagall repeal or would have made little difference
  8. Well then I guess you just legitimately have a problem with reading comprehension and/or following topics. What is the title of this thread?

    p.s. I didn't drink the from the punchbowl. So call it everyone minus 1.
  9. Daal


    Your just a mindless republican who cant read. Volcket says separating types of banks is a brillant idea. I showed that it brings its own problems since IBs are MUCH more vulnerable to runs due the factors I mentioned
  10. First of all, I am not a republican. I am a fiscal conservative. BIG difference. Secondly, I guess I was right after all about your allegience to the BHO. Bottom line is we may or may not still be in our current economic situation regardless of the repeal of Glass Steagall-- but Volkers point would be moot were it not repealed. Just one less ingredient in the recipe for disaster- slightly less important than the CRA backers and greenspan keeping rates too low for too long.

    And no one would care if a bunch of wall st. aholes blew themselves up EXCEPT for the fact those banks are so tied to commercial banks, thereby putting savings account holders on the same level as CMBS holders. See the difference?
    #10     Mar 6, 2009