9/23/12'Gentle giant' Paul Volcker has too little time left to fix the world - Telegraph3/5telegraph.co.uk/finance/…/Gentle-giant-Paul-Volcker-has-too-little-time-left-to-fix-the-world.html
is just lost energy. There are whole crews of people sitting in back rooms figuring out complexnew products to sell to customers that promise to protect them from losses in the stock marketover the next million years but which, of course, never do."Volcker questions how much of the Wall Street boom years have actually translated into tangiblewealth for wider society – in terms of economic productivity and growth in GDP. In the US, hesays, the average American household did not have any serious increase in income, despite therapid expansion of the financial services industry."My grandson went to do all of that financial engineering stuff," says Volcker, again with a laugh."I said why are you doing this? Do you really think it is productive or beneficial? He said he did it because his boss told him too. Well, I won't accept the Nuremberg defence."At the moment, the job that Volcker was brought back to do has still not been completed. Much of the regulation penned in 2010, including the "Volcker Rule" has yet to be implemented andmarket "push-back" on reform has brought even accepted regulation to a standstill.The self-proclaimed "old-school central banker" says he is worried about the momentum for fixing the financial services industry. He says money markets, credit agencies, accountingstandards and derivatives remain by and large untouched by reform."There are a lot of people in the banking world, especially at the big banks, that say forget aboutit, we're back to normal. Leave us alone."But there has to be recognition that the job is incomplete. This, after all, is no ordinary recession.This is a recession on top of a complete financial breakdown and it will take a very, very longtime to recover."In the US, two years after the introduction of the "Volcker Rule" as part of the Dodd-Frank legislation, the law has still not been finalised.In essence, Volcker's law means banks, whose savings are guaranteed by the Government, are notallowed to make bets on their own account. In the UK, similar incoming regulation from theVickers Report has a more watered down version that allows banks to "ring-fence" proprietyinvestment divisions.The legislation has missed deadlines and ballooned into a 298-page document, mostly filled withcomments and demands from banks and their lawyers.