While Paul Volcker - who we had high hopes for - has been effectively stuffed in a closet by Larry Summers, [Jun 26, 2009: Volcker Marginalized - Major Push Back on Curbing Excess] we always enjoy hearing what he has to say since it takes us to a magical scenario where things would actually change in the country.

Ah well, we'll always have our dreams.

Via Bloomberg

First, on the economy

  • Paul Volcker, the former Federal Reserve chairman who’s an economic adviser to President Barack Obama, said there’s a “long way to go” before the economy returns to pre-recession levels.
  • It will be a long slog -- a matter of years -- with the risk of some relapses along the way,” Volcker said today at a financial conference in Beverly Hills, California. While Volcker said he sees signs that the economy is in the “early stages of recovery,” he also warned that “it is way too soon to resume business as usual.”
  • At the same time, the economy is seeing “some bounce” from the lows of the downturn, Volcker said.

Second, on our financial oligarchs who now not only can do commercial banking with taxpayer backstop but high frequency trading, trading huddles, commodities trading, and just about anything they want. With your money at the ready if things ever go awry.

  • In his speech, Volcker renewed his call for a limit on the activities of banks that are considered “too big to fail,” going beyond what other officials in the Obama administration have advocated.
  • “I do not think it reasonable that public money -- taxpayer money -- be indirectly available to support risk-prone capital market activities simply because they are housed within a commercial banking organization,” Volcker said.

It is reasonable Mr. Volcker - when the sheeple don't pay attention to what they are on the hook for.

If you don't notice this is a thinly veiled reference to a small group of our financial oligarchs i.e. the Goldman Sach's of the world which are now effectively taxpayer protected hedge funds labeled as bank holding companies so the whole world knows they now have the US taxpayer as their backstop. And don't let commercial bank JPMorgan (JPM) with the golden child Dimon at the top off either - trading activities are more and more of their profit center.

  • Extensive participation in the impersonal, transaction- oriented capital market does not seem to me an intrinsic part of commercial banking,” Volcker said. “Substantial involvement in heavily leveraged finance and heavy proprietary trading almost inevitably entails risks.”
  • I want to question any presumption that the federal safety net, and financial support, will be extended beyond the traditional commercial banking community,” he said.

I question it every day, unfortunately I... like you... seem to be speaking to a wall.

  • Since January, Volcker has advocated that regulators should prohibit financial companies whose collapse would pose a risk to the economy -- those considered “too big to fail” -- from engaging in certain types of trading and investing activities.

And since January, Summers [Apr 9, 2009: Larry Summers - No Conflict of Interest; He Pinkie Swears] has chuckled in bemusement...

[Apr 24, 2009: Paul Volcker Says World in Great Recession]

[Apr 11, 2009: Paul Volcker Assumes Smaller than Expected Role with Obama]

[Apr 9, 2008: Paul Volcker Speaks]

[Mar 6, 2009: Where is Paul Volcker?]