I see the reins we keep on the banks are being released in order to permit them to pursue greater and greater profits, as noted by Politico:
The Federal Deposit Insurance Corp. board voted 3-1 Tuesday to give big banks more leeway to make risky short-term bets in financial markets by loosening a landmark but highly contentious regulation known as the Volcker rule.
The FDIC and four other independent agencies have dropped their proposal to tie the rule to a strict accounting standard — a move that banks argued would have made it more burdensome by subjecting additional trades to heightened supervision. Instead, regulators will give banks the benefit of the doubt on a much wider range of trades, according to the text of the final rule.
And how do I feel about this? HAH! Last time we saw the banks making risky bets, we ended up in the Great Recession. Democrats are not happy:
The rewrite “will not only put the U.S. economy at risk of another devastating financial crisis, but it could potentially leave taxpayers at risk of having to once again foot the bill for unnecessary and burdensome bank bailouts,” House Financial Services Chairwoman Maxine Waters (D-Calif.) said in an email.
So I’m not alone. Fortunately, this is not the final say:
Comptroller of the Currency Joseph Otting on Tuesday signed the revised rule. Three other agencies — the Federal Reserve, Securities and Exchange Commission and Commodity Futures Trading Commission — must still approve it.
The Federal Reserve may have, ah, reservations.
So how many more recessions will we have to go through before we get it through our collective heads that regulation is not a dirty word?
Libertarians would claim this is a self-correcting problem, that the survivors of the big crash will learn and not repeat mistakes, but I fear the chase of profits is turning out to be amnesia-causing.
Even Iceland’s approach to the Great Recession – they jailed their bankers – might not be enough.
