Depending on what kind of firm they’re at, and how they’d be affected by the so-called Volcker Rule, it’s understandable that some on Wall Street would be less than pleased by Paul Volcker and the role he’s playing in shaping financial reform.
But actually, the industry owes him a big debt of gratitude.
TNR’s Noam Scheiber (via POLITICO) describes Volcker’s efforts to prevent the Dodd Bill containing a very harsh anti-derivatives amendment proposed by Arkansas Senator Blanche Lincoln. That amendment, basically, would have prevented any firm with access to the Fed from dealing in derivatives.
Basically he wrote a letter saying to Dodd: Cut it out, it goes too far.
Of course, as Scheiber observes, the only reason the letter worked is because Volcker has such credibility owing to his stern criticisms of the street, and his push for a quasi-return to Glass-Steagall days.
Of course, for reformed, it all comes down to whether the Volcker Rule — or the Merkley-Levin Amendment — gets passed. This is probably the last big hope for true reform, as other major initiatives like a thorough Fed audit, and a leverage cap, and a size cap have all failed. If no rule is put in place to separate trading and banking, then we really end up nowhere.