Wednesday, November 4, 2009
Paul Volcker: Is He Being Marginalized?
I think the word about Paul Volcker being marginalized in the Obama administration is getting around. That is the good news. Whether anything is going to change is a whole different story. I saw something about Volcker being marginalized on MSNBC yesterday morning, so, it is definitely getting some play. The question to ask now is, can President Obama get Volcker on a one on one and hear for himself what needs to be done to correct the problem that hangs over all of our heads - Too Big To Fail!!!
Summers and Geithner must go is the other piece of this puzzle. They are between President Obama and Volcker. This stuff, as I have written in the past, is not rocket surgery. Letting commercial banks have a casino within the holding company is just not smart. Who would build a factory with volatile explosives and then run flames through the walls? It does not take a genius to realize that at some point the flames will ignite the explosives. Commercial banking and investment banking should be separated again, AND, they should go back to being partnerships, and that means no publicly traded equity securities.
Too Big To Fail will continue to be a problem, AND, this problem will, in my opinion, hold back the economic recovery. The issues about the credit rating agencies is another problem, but that is a separate issue from the banks. President Obama can not know everything, that is why he has advisers. Let us hope he talks to the right ones about the issue of Too Big To Fail.