Paul Volcker Prescribes Some Tough Medicine
Former Federal Reserve Chairman Paul Volcker testified before the committee on Banking and Financial Services yesterday. His recommendations to prevent another financial meltdown included:
- Reaffirm the principle separating banking from commerce as our approach to financial regulation;
- Regulate Derivatives as a typical financial product;
- Encourage more prudent compensation practices;
- Close existing loopholes that inevitably weaken prudential safeguards;
- Register and establish reporting requirements for hedge funds and private equity
Volcker also criticized the bailouts and the notion that some institutions were too big to fail. He added that complex relationships would be challenging to regulate and that reform would need to spread across nations in a cooperative alliance.
SMA Comment: Volcker should be offered a position of high authority over a redesign and reform of the financial system. However, there are powerful interests that would prefer he fade into the sunset.
Source:
http://www.ritholtz.com/blog/2009/09/volcker-reinstate-glass-steagall/
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Tin
October 6, 2009 at 8:59 pm
In the land of the blind, the one-eyed man is king.