Obama's 'Volcker Rule' shifts power away from Geithner

[cal04]

http://www.washingtonpost.com/wp-dyn/content/article/2010/01/21/AR2010012104935.html?hpid=topnews

For much of last year, Paul Volcker wandered the country arguing for tougher restraints on big banks while the Obama administration pursued a more moderate regulatory agenda driven by Treasury Secretary Timothy F. Geithner.

Thursday morning at the White House, it seemed as if the two men had swapped places. A beaming Volcker stood at Obama's right as the president endorsed his proposal and branded it the "Volcker Rule." Geithner stood farther away, compelled to accommodate a stance he once considered less effective than his own.

The moment was the product of Volcker's persistence and a desire by the White House to impose sharper checks on the financial industry than Geithner had been advocating, according to some government sources and political analysts. It was Obama's most visible break yet from the reform philosophy that Geithner and his allies had been promoting earlier.

Senior administration officials say there is now broad consensus within the White House and the Treasury for the plan advanced by Volcker, who leads an outside economic advisory group for the president. At its heart, Volcker's plan restricts banks from making speculative investments that do not benefit their customers. He has argued that such speculative activity played a key role in the financial crisis. The administration also wants to limit the ability of the largest banks to use borrowed money to fund expansion plans.

[Andy823]

1. I for on am glad!

We need to do something different, and this sure sounds like a good start to me. It's pretty obvious that what the WH had been doing was not working, and the banks were laughing at the country as they paid themselves huge bonus's. It's time to get tough, and this is one small step for the taxpayers of this country, and I hope we see many more steps to help out the taxpayers instead of Wall street!

[bleever]

2. Read the full article.

Volcker had been arguing that banks, which are sheltered by the government because lending is important to the economy, should be prevented from taking advantage of that safety net to make speculative investments.

...

"We ought to have some very large institutions whose primary purpose is a kind of fiduciary responsibility to service consumers, individuals, businesses and governments by providing outlets for their money and by providing credit," he said during one speech in Toronto. "They ought to be the core of the credit and financial system. Those institutions should not engage in highly risky entrepreneurial activity."

[Helga Scow Stern]

3. Hey bleever.

It is good to hear from you once again at the heart of things, like in 2004 when some of us realized for the first time the nature of the trouble we were in. I used to be Ojai Person, but decided after Obama was elected that I would brave my true name.

[bleever]

4. Hi there!

I sure wasn't expecting another catastrophe on this scale.

The curse of living in "interesting times".

:hi:

[raising2moredems]

5. Excellent...

Volcker having his say in regulatory matter will NOT be appreciated by the financial industry }(

And the best part is the "almighty god of all *r's*", aka reagan, renominated Volcker for fed chairman in 1983.

[yurbud]

6. Geithner's reform was window dressing and hope the public anger would blow over