Volcker's Rules

Monday, February 08, 2010

Former Federal Reserve Chairman and current economic adviser Paul Volcker advocates breaking up the big banks. Felix Salmon, economics reporter for Reuters, talks about Volcker's ascendancy in the Obama administration and other economic news of the day.


Felix Salmon

Comments [12]

Jgarbuz from Queens, NY

The creation of the Casino Economy starting in the 1980s caused a massive misdirection of resources into real estate investment, based on low energy costs and easy access to cheap credit and illegal imported labor. It created the illusion of wealth creation lifting millions into large homes, large cars, and large investment portfolios heavily invested in this unsustainable bubble economy that the Casino Economy created. And so, when it burst - as it had to do eventually - we were left with lots of real estate stock and plenty of unemployed labor in construction, and middle class jobs in the service industries supporting this bubble.

However, returning to a rational economy based on rational investment decision-making is now very difficult due to all of the resources, both human and physical capital that had been misdirected and wasted for over 30 years, is proving extremely difficult and wrenching. There is no going back, but how do we go forward? That is the question.

Feb. 08 2010 11:18 AM
RCT from NYC

Brian, the student loan issue relates to a question you asked a couple of weeks ago regarding whether parents would refuse to pay for the kids' college educations. The real issue is not whether parents -- or kids -- are selfish, but whether middle-class couples are being forced to choose between educating their children, and long-term security.

Feb. 08 2010 10:58 AM
superf88 from

To the banker that called in: your honesty and clarity is refreshing, i hope you continue providing your insight to the show.

Feb. 08 2010 10:57 AM
Alex from Brooklyn

Obama got played like a fiddle by the banks....

he really looks like a little boy against them..

We have a great crises... the banks are obviously to blame... And the banks make it look like they did nothing wrong...

real joke

Feb. 08 2010 10:54 AM
Greg from NYC

Volcker has a proven track record of keeping inflation down. NYC would be more in debt than CA if not for him.

Feb. 08 2010 10:53 AM
Greg from NYC

Tarp money was given because the govt didn't believe the debt to asset ratios. At the time of tarp the banks did not have a full understanding of their over exposure to risk.

Feb. 08 2010 10:48 AM
hf not b from

put another way, hedge funds are just banks with cojones.


Feb. 08 2010 10:46 AM
Greg from NYC

The risk management departments of banks have a great understand of what is and is not a proprietary trade

Feb. 08 2010 10:45 AM
hedge funds are just banks w brains from

aside from having "too big to fail" insurance, can you mention other reasons a bank or investment house would hold onto that status rather than simply become hedge funds instead (as most of their talent did 1998 to present)?

Feb. 08 2010 10:44 AM
gerft from

what's stiglitz' position?

Feb. 08 2010 10:40 AM
Alex from Brooklyn

"Volker rule" is a Senates and Executive branch excuse for not being willing or able to get meaningful reform..

Everyone knows that they will not have to follow any menaingless "rules"...

So our governement goes back to doing nothing but asking for donation $$$ for elections...

Feb. 08 2010 10:35 AM
asdf from

so volker is the chap who set up Reagan's deregulation tsunami, by creating a huge demand for credit during the 80s (by jacking up interest rates so high our farmers rioted)?

so he's back for redemption? or is he our savior just because he was born before commercial flight?

Pete Peterson, Sarah Palin, Greenspan's briefcase, America's grey beards pick the darndest superheroes!

Feb. 08 2010 09:59 AM

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