Abigail C. Field: The Real Volcker Rule: No Gambling with the Public’s Money

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Abigail C. Field: The Real Volcker Rule: No Gambling with the Public’s Money

Abigail C. Field: The Real Volcker Rule: No Gambling with the Public’s Money

Abigail Field-

Pundits and Wall Street reforming politicians are crowing: Wowie! Jamie D has fought for weak regulations, especially a weak Volcker rule, but now Wall Street’s goose is cooked! We’re going to get a strong Volcker rule!

But that gleeful analysis amounts to: We lost the war but hey, we might still win a battle!

Former Fed Chair Paul Volcker fought incredibly hard for something much more powerful than even a strong version of the so-called Volcker rule. Volcker pushed for a return of Glass-Stegall, a law that until 1999 prevented the public financing of Wall Street gambling. Glass-Stegall/Volcker-for-real stands for the idea that when a company’s cash (deposits) is guaranteed by the government and the company has access to incredibly cheap government money, under no circumstances can the company be allowed to gamble with it.

Let’s be clear: Glass-Stegall wouldn’t prevent gambling addicts like Jamie Dimon from losing big bets. Crucially, however, Glass-Stegall would make the cost of placing those bets market rate, and make the gambler’s shareholders take the loss.

[REALITY CHECK]

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