Nothing Much Has Changed

Jesse Eisinger's article today in the New York Times DealBook section asks “what would happen if this report does what the senator hopes and puts pressure on the regulators to finish a simplified and loophole-free Volcker Rule, which would prohibit banks from making bets for their own profit using taxpayer-backed money. Why should we have the slightest confidence that big banks could be persuaded to follow it? And why should we feel reassured that, if they didn’t, regulators could or would enforce it?

We shouldn’t. And we don’t.”  Exactly what I say.  No regulation replaces fear of bankruptcy among all the actors, debtors and creditors, so that risky transactions are not a game, but a life or death existential reality.  TBTF banks will always look at Dodd Frank as something to be gamed.

From my Libertarian perspective I find Dodd Frank irrelevant.  TBTF banks are utilities to me.  Certainly nothing to invest in or to leave savings with.  The fortress balance sheet mentality espoused by J P Morgan Chase appears to have been a PR thing around the time of the Bear Stearns rescue.  As I understand it, it was Hank Paulson who had to insist on the low ball offer of two dollars a share since it appears Jamie Dimon actually thought there was enough positive value to offer ten dollars ! 

Nothing Much Has Changed