It's time to make banking boring again!
Regulators want to start making banking boring again. Today, five different regulatory agencies are expected to adopt the Volcker Rule, which would redraw a line between regular banking and Wall Street gambling. The rule is one of the centerpieces of the Dodd-Frank Wall Street Reform Act, and it is seen as a litmus test for the overall strength of the financial reform law. By rebuilding the wall between banking and investing, regulators hope to reduce the risk of another financial meltdown fueled by Wall Street speculation.
The banksters have been fighting against the implementation of the Volcker Rule, but for once, the regulators appear to have gotten their way. This new rule includes some very important changes, like banning banks from trading for their own benefit, requiring hedged risks to be “specific” and “identifiable,” and ending the practice of reward CEOs for “prohibited proprietary trading.” In other words, it won't be so easy for banksters to make trillions by placing bets against bets against bets, and they won't be able to reward CEOs for illegal activity.
But, Wall Street is already searching for loopholes in the proposed law, and they will continue to fight this regulation in court. And, the Volcker Rule is still a far cry from the banking regulations that existed before the repeal of Glass-Steagall. By passing this rule, regulators are proving that they want real Wall Street reform, but they're not going far enough to prevent another financial meltdown.
Nearly two years after the 2008 financial crash, Congress passed Dodd-Frank to reign in the banksters, but two-thirds of those regulations have not yet been enacted. To protect the American people, and prevent another banking crash, we need to rebuild the wall between banking and gambling. The Volcker Rule is a start, but we need to bring back Glass-Steagall, and make banking a safe and boring business once again.