"Quite simply, it is the Federal Reserve that has (surely should have) the independence from political pressures, the prestige and the essential qualifications of experience to serve as overseer of the financial system. "

That looks like the proof in the pudding, that the FEDster, does not need to steal more power, when they can bring the entire system to its knees, and have the entire country begging, and handing them the keys to the city. No charges of fraud, because they are perps.

Have not read your whole ticker and did not understand your points.
But at begining of his testimony he is pimping federal reserve to be in charge of more oversight in banking/ financial system
And that is contrary to your idea that fed itself is the cause
Why all of these guys sound like whimp and not forcefull enough in their talking point.
As long as they sound like whimp nothing will be done

I guess Goldman won't be hiring him anytime soon.
Ok, so he called Bernanke a lumbering idiot and Geithner a wet-behind-the-ears Wall Street ass-licker.
Long Paul still has plenty of sparking brass balls left.
A public shot to sink Geithner and his bank baby sitting attitude.

Volcker's plan is to get prop desks hit with capital charges that will significantly increase their cost of doing business. Sort of risk adjusted pricing on waht has been looked on as risk-free activities. This will be in UK, US, Germany and elsewhere at the same time. I.e., re-instate Glass-Steagall (and for other markets this is new to them since the US has been the only country with the G-S distinction) but through pricing on the activity, not legally separating the activity. It could very well work. If there is one person to do it, it would be him.

Not holding my breath, but at least he is trying. And he has taken on the banks twice before and won both times.

Yep. Putting a risk-based pricing model on the activity makes a lot of sense.

You can do it, but you won't make any money at it!

There is no hope of reforming banking when it is but one aspect of a government that has become lawless in every way. Let them destroy themselves with their excesses and perhaps what comes in to fill the vacuum will be less corrupt.

It's good somebody is calling them out for the history books, but I think it is past the point of a quiet and orderly change.

No punishment for violations of securities laws? Hell, in today's financial world, there would be hell to pay if one did not violate the law - at least a little. The price is being paid by all of us - and that price is about to get a lot highter. Also, the Fed is a ridiculous regulator. It is a banking consortium - made up of the biggest banks on the planet - exactly what incentive to Volker expect to ensure that the SDIs that make up the Fed would be regulated by its child?

The corporate advantage mentioned in the last few paragraphs rings true.

If a corporation engages in risky and even unlawful behavior, they only have to fire a few individuals claiming that they've ended that behavior. When they take a fine, they simply put that cost off on their customers. Price fixing, fraud, slamming and other corporate crimes against the consumer or against the investor easily surpass felonious dollar amounts, yet the penalty, in relationship to the size of the corporation is like a parking ticket fine to an individual.

It would be argued by corporations that sanctions or fines are massive but the truth is that the corporation more often than not survives and thrives while if those same relative penalties (that is, if an individual is charged with a felony) were put on an individual the individual would be crushed and driven out of business. It's simply not balanced at all.

Sorry - there will be no financial reforms:

Obama caves to pressure on consumer financial protection

Submitted by Edward Harrison of Credit Writedowns

At issue here is the news that the Obama Administration dropped plans to force financial institutions to offer “plain vanilla” financial products that are simple enough for consumers to understand. My headline is editorial enough on this issue. So, rather than editorialize this latest announcement, I’ll quote from the press.

http://www.nakedcapitalism.com/2009/09/o....

So as I understand it Volcker is going to testify before the same group of people who have allowed this fraud to occur.

Yep, Gen, I see changes a comin'.

Volker is as Conservative as Any in the Administration's Economic Team.

He has made some Reasoned arguments for dealing with respect to the 2B2F Institutions; however I don't see any momentum for His proposed Policies...

I do have misgivings about Mr. Volker's Globalist Ideological Tendencies and perceive that His Regulatory Positions are both Problematic and Unpopular within the Administration He Serves.

Volker did, under Reagan; met out some bitter Medicine...
No One is a Position of Power is interested in administering the Tough Love nor closing down the Bezzle.

My view is that Volker would simply likely be a better Steward of the FED or Treasury than Bernake or Geithner; -or the presumptive Larry Summers.
that is not say I consider Volker the Best Choice; merely a Better One.
I Do Not believe that the Bezzle can be fought by any Single properly directed and managed Entity; -including the FED or Treasury.

This is all high priced Political Capital.
It might be a matter of Political expedience for Volker to moderate on Policy in order to exorcise the shaping of It.
It seems All Political Appointees function differently than advertised before Appointment.
How Volker would function in any particular position is not a given based on either His prior words or actions...

Our Administration, and the Choices within It's ensconced Leadership; leaves much to be desired.

So ... you want enforceable laws ... that means bigger gov. ... that means more meddling into the capitalist system ... that means higher taxes ... that means more socialism ...

Geee!
The capitalist reduced the socialist interference and now the capitalist are advocating a socialist oversight and want to get back into enforceable regulation of the capilalist system.

Remember, from The FDIC and the organization created for cleaning up after the savings-and-loan crisis, the Resolution Trust Corp., had 22,549 employees in 1992. By the end of 2006, there were 4,476.
Gray, the FDIC spokesman, said that the reductions were in line with the reduction in the number of FDIC-supervised banks, and that the decline has been reversed since mid-2006, when Sheila Bair became chairman. The agency now has more than 6,000 employees, Gray said.

How many more gov. employees/inspectors do you think will be need this time to keep the banksters honest?
25,000 ... 50,000 ... 75,000

There used to be 22,549 ... hummm! Where did they all go? Who gave then a job when they got laid off?

Jal,
I won't take your bait regarding economic systems.

But, since you asked, how many reagulators does it take?
For one of the top 5 global banks, I would say about 100 full time bank examiners. That's roughly what they currently have going since end of 2008. If you include foreign branches (like London, HK) another 50.

The next tier, the top 5-20 need about 50 FTE running around checking things.

So for the top 20 we are talking about 1,500 headcount.
As we've seen, it doesn't mean they are effective. They don't get involved in deals and frankly, any banker worth their salt run circles around them. They ask people to fill out forms and make sure debits equal credits. They don't even have access to the trading floors...

If they had experienced people who knew what to look for (eg pricing moves as part of HFT algorithms, mortgage portfolio analysts) you probably need about half as many.

I'm not a lawyer, but my understanding is that a so called law that doesn't have the penalties for breaking it spelled out is subject to being voided for vagueness - as in it isn't Constitutional law.

No change except from without, ergo we will be forced to accept change by external "situations". We are falling, and I do not know if we'll be able to get back up once we hit.

Karl- FYI, the ticker is taking ~45 seconds to come up on my machine. The forum and all other pages are taking the regular amount of time (1-2 secs). Did you get posted on a forum somewhere or something?

-E

Even a Barofsky still after all this time can't get jack info out of the system. Reason? Transparency = Incarceration.

Get a load of this....

http://thehill.com/homenews/administrati....

..........

Liberty isn't free.

http://www.usdebtclock.org/

"So ... you want enforceable laws ... that means bigger gov. ... that means more meddling into the capitalist system ... that means higher taxes ... that means more socialism ..."

Not necessarily.

But the more I think about the escalating failure of our judicial system to uphold existing laws, the more I ask myself what is impeding the enforcement of these laws. And as a professional economist, I suspect we don't have enough competition (or freedom/opportunity) to pursue the criminals.

I'd like to see PRIVATE firms permitted into the 'market' for pursuing criminals. Some version of bounty hunters. I have NO idea how this would work, but depending on the establishment to police itself is in no way tenable any longer.

Quote:

a market-based financial system do not again jeopardize the functioning and foundation of our economy.

commercial banking institutions, which are potential beneficiaries of official (i.e., taxpayer) financial support

1. what market-based system ? any system with a central bank is not market-based
2. a market-based banking system would not, without government intervention, have been able to bring down the economy
3. Volcker needs to explain why any bank of any type should ever get taxpayer money. Failure is regulation.

OK, Volcker has now confirmed for me what I long suspected; he is as protective of "the bezzle" as any central banker. The only difference between Volcker and Bernanke is in degrees. Bernanke will allow any behavior no matter how outrageous and venal, but Volcker thinks the "earnings" should be just a tad bit more restrained so the show can continue.

He's a pigman just like the rest.

"There were hundreds if not thousands of people who lost huge amounts of money in IndyMac, as they were over deposit insurance limits when the bank failed."

Is it possible to get the actual amount of depositors losses over the FDIC insurance? A concrete number on IndyMac would go far to counter the often repeated FDIC catch phrase "In it's 75-year history, not one depositor has lost a dime." I know they refer to the deposit insurance but that is of little consequence to someone who lost a lot of money in a bank failure.

Someone always has to regulate a capitalistic market, otherwise you get monopolies and those with bigger bank rolls simply steaming over others. The government is there to create the rules and regulations for an even playing field that benefits all not just the few. You can't ever avoid this aspect of it.


True capitalism, is what happens at the poker table, once you have more than half the chips, you control the table, and hence have higher odds of winning the game. Without regulations, this market would have been cornered long time ago, and like the poker table, every rival sent packing.

If it was true capitalism, only money would rule. You would not have a president, as the entity with the most capital would be in control.




People need to think about what they want, don't just shout "Capitalism" as a mantra without knowing what it means. These words are used most of the time to rip you off. The biggest proponents of captialism are usually the ones with the least capital.

The guys with the capital, are doing everything in their power to avoid the rules.

The system has to be fair.


My chance, of losing 5% on $100. Has to be just as equal as someone losing 5% on 100 Billion dollars.


This is the only way to ensure fairness in the market. Some will say bunk, if I put that much capital I should have an advantage. Well, you do if you win, your capital is proportional to the payout and risk, therefore it is fair.


However, the market does not work this way. The large transactions have drastic effects, on the market itself, and those that can harness that power do so for their gain. They have been playing the market sucking money out just this way... leaving an overvalued piece of crap for the rest of us.






Here is what is funny, right now we are simply waiting to see who is going to take the loss. The media and your government has already said that you will. Will you? (Remember those that did this? They got bonuses, where is your bonus?)

Those of you with these ideas of "Capitalism". You think you can compete with these guys? I doubt it.



There you were running around being all capitalistic, while these guys were sucking your milkshake underneath you. Suddenly you are not just looking at your ballance, but what that dollar is worth.

Makes me wonder if Volcker didn't try in his own little way to help set the tone of debate at the upcoming G20. He may be a pigman but he's an older wiser one who just might grasp that there is no trough big enough to hide behind if, as Shrub put it: This sucker goes down!

So it's not that they're engaging in bending the rules in order to keep banks afloat, they're trying to perpetuate massive fraud because the regulators/participants are personally benefitting from the fraud...