A few months ago, it appeared that the “Volcker Rule” would be defeated in the United States Senate. However, the version that has been adopted in the legislation currently under consideration in the Senate includes enough of the original proposal to satisfy Paul Volcker. In a Fox Business interview, Mr. Volcker comments on the current legislation and again clearly outlines his main objection to proprietary trading by banks that have implicit or explicit government backing as “too big to fail” institutions which he sums up in the following statement:
“I don’t think it is necessary or desirable to go back literally to Glass-Steagall. Now, I do want a separation between functions that I think are essential to the economy: running the payment system, providing a depository for you or anybody else a safe place to put their money. Extremely important during this last crisis. Providing loans to smaller and medium size businesses. Backing up the commercial paper market. Those are all critical functions. You don’t need to do proprietary trading to carry out those functions. Somebody else in the market ought to do that and if they fail, they ought to fail.”
