While the White House favours a modest increase in oversight, Obama advisor and former Fed chairman Paul Volcker wants specific limits on large, too-big-to-fail banks.
Bloomberg: 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 organisation,” Volcker said.
Basically, Volcker reprises his argument that big banks should be more like regular banks. So, no quasi, propriety hedge funds trading the bank’s money. If they want to trade, it has to be the client taking the risk.
But we doubt Volcker’s calls will get much play inside The White House, given that he’s been marginalized, and that this would represent a diversion from the regulatory reform outline laid out by Tim Geithner.