Thursday, October 24, 2013

Volker Rule

Gensler and Stein say they are concerned that the latest draft of the [Volcker] rule wouldn’t prevent another episode like last year’s “London Whale” trades at JPMorgan Chase & Co. (JPM) that cost the bank more than $6.2 billion in losses, said one of the people, who spoke on condition of anonymity because the deliberations aren’t public.

FLG has said it before, the Volcker rule sounds great in theory or to a lawyer, but is basically impossible to implement in reality.  No regulator is going to be able to tell the difference between hedging and risk taking.   The only way to really implement it would be to forbid depository institutions from using derivatives at all, which, FLG would argue, make the system more, not less, risky.

This whole thing is a fucking fool's errand.

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