Volcker Swiftly, Violently Shot Down by Congress

Yesterday, former Federal Reserve chairman Paul Volcker finally gave his testimony to Congress on “Volcker’s Rule,” which is his plan to restrict risky trading by commercial banks. Today, we report back that the effort to bridle the wild and too big to fail horses of Wall Street is looking pretty much dead in the water.

According to The Wall Street Journal:

“Mr. Volcker’s testimony was at once a brilliant articulation of the structural dangers of Wall Street as it stands and a forceful warning. He clarified the most controversial part of the rule, the ban on proprietary trading for commercial banks.

“A bank ‘trading for its own account, it will almost inevitably find itself, consciously or inadvertently, acting at cross purposes to the interests of an unrelated commercial customer of a bank,’ he said in prepared testimony…

“…But given the reaction of committee members, the Volcker Rule appears to be doomed. By the end of his testimony the dais was nearly empty. Big bank stocks rallied. The only question now is whether the bill will be gutted or euthanized like failed investment banks would have been under the Volcker plan.”

There it is. Perhaps there’s a chance something could yet come of his hope for the nation, but it seems for the most part unlikely. Read more description of Volcker’s testimony at The Wall Street Journal’s coverage of Volcker and reform defeated.

The Daily Reckoning