“Volcker Rule” appears dead before it had a chance to bloom

CNBC deemed the hearing not as important as their daily dose of fluff and stuff so the entire hearing was not aired on the cheerleader station.

Initial, encouraging and "common sense" commentary by Mr. Paul Volcker:

The first point I want to emphasize is that the proposed restrictions should be understood as a part of the broader effort for structural reform. It is particularly designed to help deal with the problem of "too big to fail" and the related moral hazard that looms so large as an aftermath of the emergency rescues of financial institutions, bank and non-bank, in the midst of crises.

The federal safety net for commercial banks should protect depositors, not speculators, urging them to pass the so-called Volcker Rule that would ban banks from trading for profit and that would restrict the size of the biggest banks.

Banks must not be allowed to reap the benefits of successful speculation while handing taxpayers the costs of failure.

Only four or five U.S. commercial banks and only a couple dozen worldwide engage in the kind of risky proprietary trading that would be banned by the Volcker Rule.

The administration's proposal would follow the model of the Federal Deposit Insurance Corp., which takes over failing banks to protect depositors and the payment system, without protecting management or shareholders, "In other words, euthanasia, not rescue”.

Then the kiss of death via a couple of career politicians:

Democratic Sen. Christopher Dodd of Connecticut told former Federal Reserve Chairman Paul Volcker and Deputy Treasury Secretary Neal Wolin that President Barack Obama's proposal had complicated his attempts to write legislation. Dodd conceded that the timing of the administration's proposal "had raised eyebrows."

Sen. Richard Shelby of Alabama, initially said he was open to any idea that would prevent another "calamity," but, after the hearing, he said he was inclined to vote against Volcker's idea. He chastised the administration for "air dropping" its latest proposal months after debate had begun on rewriting the rules of the banking system.

Chris “lame duck” Dodd notes the timing of the proposal (common sense) had raised eyebrows. Chris, on your website, you refer to yourself as a common-sense leader. Would your common-sense leadership explain your refusal to acknowledge that Fannie Mae and Freddie Mac were in a financial crisis? Maybe that was more of an intelligence thing? Maybe your true leadership qualities surfaced when you sold out us citizens when Geithner and Larry Summers urged you to amend the AIG bonus clause? You sir have given the country plenty of raised eyebrows since 1975. WE AMERICANS LOOK FORWARD TO YOUR LEGISLATION GIVEN THE FACT THAT YOUR ATTEMPTS ARE NOW COMPLICATED.

Senator Shelby describes the timing of the proposal as “air dropping” after months of debate had begun on rewriting the rules of the banking system. Let’s be clear Richard, months of debate is not equivalent to actually producing anything tangible.

Your description as “air dropping” is interesting as someone likely used a similar phrase when you switched parties in 1994. Do you every experience that déjà vu (a.k.a. Groundhog Day) given your 31 years in D.C.? Granted, you were not in favor of bailing out the auto companies as government subsidies for manufacturing would be French model. What is the model Richard, when the banks and Wall Street continue to bend all of you over a barrel and nothing changes?

There is no future with Dodd as he has one foot out the door and the other is embedded in his mouth. Shelby, I passionately encourage you to spend some time over the weekend and learn a bit more about proprietary trading including the obscure instruments these institutions have been and continue to trade prior to dismissing Mr. Paul Volcker.

Your website includes a pressroom article dated 2/20/2007 in which you stated, “If we keep borrowing money it will put the debt on our grandchildren and affect their quality of life.”

Well, Mr. Shelby, it is now February 2010, do something about it and quit whining about “air dropping”.