As it turns out, The Volcker Rule looks as if it will be either ruled out – or inconsequential. While originating as a 10 page article designed to due out with reckless spectulation within financial markets, has now become a roughly 300 page article due to the continual intervention of corporate interests. As it stands there are enough “exceptions” or in laymans terms, loopholes, to make the document nearly ineffectual in market regulation.
Interestingly, the corporate lawsuits that have been occuring since the onset of the financial crisis are not properly publicized. On top of that, the financial market is a very complicated and rarely understood aspect of our nation – so even when it is publicized, the vocabulary is rarely understood by the average American. For instance, Citigroup, currently in a lawsuit which it neither denied nor accepted responsibility for, yet did pay a settlement on – was found to have gone one step past risky investing. Instead of merely taking risky investments, they actually took them on and betted against them to short and then pawned those investments off on other people. All for their own profit. Essentially knowingly throwing a large amount of people under the bus. That is reckless trading, and that is what The Volcker Rule – along with the Occupy Wall Street Movement is trying to prevent.
One fatal flaw of the Occupy Wall Street Movement is its lack of definition. By that, clear objectives. It seems many times that the signs people hold up in the streets, or the forums they comment on are more a forum to bash on rich republicans, which obviously isn’t the answer. The mission needs to be stated and then rallied around. There seems to be too much misguided information being dished out. For myself – Occupy Wall Street says a few things: End corporate interests in politcs. Government should not be run by money. The wealth gap in the United States is unacceptable, revamp the tax code and get rid of loopholes or exeptions as they say. Corporations are too powerful as they stand. The quesiton here is: How do you some all of that up in one statement? Essentially it is an end to greed and pride, more or less.
After the stocket market crashed in the 1920’s an act called the Glass-Steagall was enacted (1933) which did a number of things, but it’s largest single impact was the seperation of commercial banks from investment firms. Meaning, that your friendly neighborhood Bank of America where you deposit your money AND is federally insured, can’t gamble with your money in hedge funds and risky mortgages. The Glass-Steagall Act was revoked in1999 which directly influenced the severity and timing of the financial crisis. Elements of the act were also revoked in 1980 – the federal regulation of savings account interest rates. But even with all the repels of the Glass-Steagall Act over the years, the FDIC, which was also established in the 1933 signing of the bill – has not yet been revoked. Originially when the bill was signed – the regulations where put in place so that banks could be insured – as it stands now they are “insured” under the “too big to fail” idea. (The Bailouts)
Since the recent financial crisis, there have been efforts to place real regulation of the markets – which have all come into opposition from the very institutions that were responsible for the financial crisis in the first place. With the recent Occupy Wall Street movement gaining momentum a single goal needs to be rallied around. The Tea Party, a similar grass roots sort of political opposition, has been able (for the most part) to declare exactly who they are and what they stand for. But even with their strong definition – no political canidets want to ally with the extremes. Occupy Wall Street, manifesting itself more as a protest movement with politcal aims rather than a politcal movement itself, has the power to push for the regulations.
Old world economics no longer are effective, derivaties have far too large a role in our economic systems. At one point or another, the derivatives market had a value that was 11 times the size of the world economy, estimated on average at over $700 trillion. The Volker Rule, which was aiming to eliminate propriety trading (essentially a bank gaining a profit for itself with a great deal of risk) has been watered down to the extent where propriety trading will still be allowed, thus proving a nightmare for any judicial hearing associated with white collar crimes.
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