Regulation

TAKEAWAY: REGULATION

In my view—and this isn't a view, obviously, universally held in America—Volcker’s core argument is absolutely right. Many in the industry did lose their way. And while there are many great banks in the United States that stuck to their knitting, many, obviously, did not. They began to look at clients not as clients, but as counterparties, instead of substitute a view that says, well, let the buyer beware. And we’ve all heard people talk where they actually clearly described it as that.

Now, what’s happened here with Volcker is, though, that the regulators overreached in trying to write these regulations to implement Volcker, turning a simple principle into a legal labyrinth. Frankly, and I think this is a very positive sign, the Fed has responded, and has now postponed its implementation date.

The risk is that by having overreached in writing the rules, that they’ve damaged the support for Volcker, because the spirit of what Volcker is saying is right. Banks should not be hedge funds. Their mission has to be, to do things that add value to the economy. They do not have the right to put the taxpayer at risk.

If you want to speculate, do so in an institution which everyone will allow to collapse and let the shareholders and creditors pay the price. Don’t go into the banking business.