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Politics : American Presidential Politics and foreign affairs -- Ignore unavailable to you. Want to Upgrade?

To: TimF who wrote (40489)	1/15/2010 11:25:02 AM
From: DuckTapeSunroof	Respond to of 71588

Volcker Calls for Support in Fighting Bank Lobby on Reforms By Christine Harper bloomberg.com Jan. 15 (Bloomberg) -- Paul Volcker, the former Federal Reserve chairman advising the Obama administration, said bank lobbyists are promoting “reform light” and blocking regulatory changes that would stave off future crises. “If you agree, make your voices heard somehow or another,” Volcker, 82, told more than 500 people yesterday at the Economic Club of New York, whose members include bankers, hedge fund managers, economists, lawyers and former government officials. “There is heavy lobbying on the other side, and that has to be overcome.” It’s been a year since Volcker issued a report from the Group of Thirty, a panel of former central bankers, finance ministers and academics, calling for separation between commercial banks and businesses that engage in speculative risk- taking like hedge funds and proprietary trading. The idea hasn’t been embraced by most regulators and lawmakers. Volcker also rejected congressional efforts to strip the central bank of its supervisory and regulatory powers, siding with current Fed Chairman Ben S. Bernanke, who this week urged Senate Banking Committee members to reconsider the proposal. Volcker chairs President Barack Obama’s Economic Recovery Advisory Board, a panel of business and labor leaders, and he’s won some supporters for changing the structure of the financial system. John Reed, 70, who helped engineer the merger that created Citigroup Inc. in 1998, said last year that he now thinks consumer banks should be segregated from activities like trading bonds and stocks. ‘Whole Bunch of People’ “I’ve got a whole bunch of people who support the position I’m taking,” Volcker told the audience yesterday. “A lot of them are rather more elderly than the average.” Volcker said some people in the financial industry believe that better risk management, higher capital and liquidity standards, accounting changes and improved regulation will be adequate to fix the financial system. He dismissed that as “reform light.” “Some market participants, possibly some in this room, seem to be suggesting that the events of the past couple of years were like a bad dream -- a truly unsettling bad dream, but nonetheless something that in the cold light of day need not require a really substantive change in the structure of markets or corporate lifestyle,” he said. Bear Stearns Sale Glenn Hubbard, the Columbia Business School dean who serves as the Economic Club’s chairman, introduced Volcker at the midday gathering at New York’s Grand Hyatt Hotel. Hubbard reminded the audience that when Volcker last spoke to the club, in April 2008, he raised questions about the Fed’s role in aiding the sale of Bear Stearns Cos., prompting then-Federal Reserve Bank of New York President Timothy Geithner to ask for an opportunity to respond. Geithner, who is now Treasury secretary, gave a speech to the club in June 2008. Obama’s proposed tax on financial firms to recoup costs of the bank bailout program won’t place an undue burden on lenders, Volcker said. “It’s not unfair to say that these big institutions that have benefited one way or another have got to carry part of that burden,” Volcker said. “It’s just a question of how we do it.” Obama proposed a fee on financial companies with assets greater than $50 billion aimed at getting back “every single dime” that taxpayers put into the bailout. The administration estimates the levy could raise $117 billion in 12 years from firms such as Bank of America Corp., JPMorgan Chase & Co., and Citigroup Inc. Defends Fed Volcker defended the Fed’s banking oversight function, saying there is “a clear need for a stronger administrative focus” within the central bank. He proposed designating a Fed board member as vice chairman for supervision of the financial system, a position that would be subject to Senate confirmation and report to congressional committees. Bernanke told senators a proposal to strip the central bank of its authority to supervise banks could harm its ability to conduct monetary policy and provide emergency aid to lenders. The Fed’s role as supervisor provides information that helps officials decide when to change interest rates, the central bank said in an 11-page paper. The document and a cover letter from Bernanke were sent Jan. 13 to members of the Senate Banking Committee and released by the Fed yesterday. To contact the reporter on this story: Christine Harper in New York at charper@bloomberg.net. Last Updated: January 15, 2010 00:01 EST