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Ex-Fed chief Paul Volcker's 'telling' words on derivatives industry

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    Ex-Fed chief Paul Volcker's 'telling' words on derivatives industry

    The former US Federal Reserve chairman told an audience that included some of the world's most senior financiers that their industry's "single most important" contribution in the last 25 years has been automatic telling machines, which he said had at least proved "useful". (AtW's comment: I agree...)

    Echoing FSA chairman Lord Turner's comments that banks are "socially useless", Mr Volcker told delegates who had been discussing how to rebuild the financial system to "wake up". He said credit default swaps and collateralised debt obligations had taken the economy "right to the brink of disaster" and added that the economy had grown at "greater rates of speed" during the 1960s without such products.

    When one stunned audience member suggested that Mr Volcker did not really mean bond markets and securitisations had contributed "nothing at all", he replied: "You can innovate as much as you like, but do it within a structure that doesn't put the whole economy at risk." (AtW's comment: aye...)

    He said he agreed with George Soros, the billionaire investor, who said investment banks must stick to serving clients and "proprietary trading should be pushed out of investment banks and to hedge funds where they belong".

    Mr Volcker argued that banks did have a vital role to play as holders of deposits and providers of credit. This importance meant it was correct that they should be "regulated on one side and protected on the other". He said riskier financial activities should be limited to hedge funds to whom society could say: "If you fail, fail. I'm not going to help you. Your stock is gone, creditors are at risk, but no one else is affected." (AtW's comment: also people responsible for failure should end up in jail with life sentences to act as a warning to future generations of greedy bankers)

    #2
    In the same way that I have no time for the people responsible for the regulatory failure in the UK, in the USA Investment Banks and Commercial Banks were legally kept separate between 1933 and 1999.

    If things had stayed that way the world would not be in the tulipe it is now.

    Comment


      #3
      Originally posted by Gonzo View Post
      In the same way that I have no time for the people responsible for the regulatory failure in the UK, in the USA Investment Banks and Commercial Banks were legally kept separate between 1933 and 1999.
      UK regulatory regime was much weaker than in the USA. That's why a lot of recent IPOs happened on LSE rather than on NYSE: nobody asked questions here.

      Comment


        #4
        Your ideas are intriguing to me and I wish to subscribe to your newsletter

        Not you AtW - Mr Volcker. I'm always keen to hear SKA news, but in this case you have to give centre stage to the man who told those useless greedy ****ers that they aren't as ******* wonderful as they like to think they are

        Comment


          #5
          Originally posted by NickFitz View Post
          I'm always keen to hear SKA news


          There are some real BIG ones in the works just now, stay tuned, they are imminent now...

          Comment


            #6
            Originally posted by AtW View Post
            UK regulatory regime was much weaker than in the USA. That's why a lot of recent IPOs happened on LSE rather than on NYSE: nobody asked questions here.
            That is down to a completely separate set of regulations.

            The Sarbanes-Oxley act of 2002 was introduced as a response to the corporate fiction that was uncovered with the collapes of Enron and Worldcom (and others).

            These regulations are so onerous that it is making companies seriously think twice about listing in the USA.

            But these have nothing to do with the ability that the banks had to gamble their entire capital.

            Comment


              #7
              AtW banging on about his views on finance & economics is like getting lectured on modern science by the Spanish Inquistition.

              Yes, the whole derivatives industry, is encapsulated in your and volckers comments on credit default swaps and collateralised debt obligations is meaningful.
              Hang on - there is actually a place called Cheddar?? - cailin maith

              Any forum is a collection of assorted weirdos, cranks and pervs - Board Game Geek

              That will be a simply fab time to catch up for a beer. - Tay

              Have you ever seen somebody lick the chutney spoon in an Indian Restaurant and put it back ? - Cyberghoul

              Comment


                #8
                Originally posted by Gonzo View Post
                These regulations are so onerous that it is making companies seriously think twice about listing in the USA.
                I don't hear much about criminals from Eastern Europe buying football clubs in USA, yet it happens in this country and nobody asks questions where the money to buy club came from.

                Those dodgy companies from Eastern Europe that did IPOs on LSE did so because of light regulation here - some of their owners can't even get visa to USA because of alleged suspected links to mafia.

                Comment


                  #9
                  Originally posted by AtW View Post
                  I don't hear much about criminals from Eastern Europe buying football clubs in USA, yet it happens in this country and nobody asks questions where the money to buy club came from.
                  That's right, they don't have organised crime, or corruption in the USA ...
                  Hang on - there is actually a place called Cheddar?? - cailin maith

                  Any forum is a collection of assorted weirdos, cranks and pervs - Board Game Geek

                  That will be a simply fab time to catch up for a beer. - Tay

                  Have you ever seen somebody lick the chutney spoon in an Indian Restaurant and put it back ? - Cyberghoul

                  Comment


                    #10
                    Originally posted by AtW View Post
                    some of their owners can't even get visa to USA because of alleged suspected links to mafia.
                    And yet Wall Street is pretty much run by the Mafia (or at least has many big players connected to the Mafia).

                    Comment

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