Regulators are considering the Volker Rule as a means to hold bank and investment CEOs accountable for engaging in questionable financial activities. The rule, for those unfamiliar with it, would make proprietary trading and investment in hedge funds or private equity funds illegal. Proprietary trading is the practice of a firm investing its own money for the sole purpose of making a profit, rather than investing its customers' money. The act is more risky and is only done to line the pockets of top executives. And this is a large focus of the rule.
Created by Paul Volker, a former Federal Reserve Chairman and a 2010 Obama appointee, the rule has seen several changes, and has not yet been implemented. It's been weakened and strengthened, since its introduction to Congress and naturally, it's seen resistance from major financial institutions.
But what could it do? Could it actually send CEOs to prison? It's possible. The rule would require CEOs to personally certify that their institutions' practices fall in line with the law, and if they don't the CEO would be held accountable. Whether the CEOs would head off to jail or be hit with huge fines remains to be seen, but most Americans would agree that both types of punishment would seem fitting. After all, the banks caused the economic collapse by engaging in extraordinarily risky behavior.
CEOs who authorized or ignored these practices are part and parcel of the problem. Not only did the banks steal their investors' money by losing it to questionable investments, they've stolen people's homes, their very lives -- all to make a quick buck. It makes sense to have a strong law to hold these leaders accountable, whether by throwing them in jail or by levying significant fines.
Wayne Abernathy, a senior official with the American Bankers Association obviously doesn't like the rule. He said, "The whole Volcker rule proposal envisions having an army of nannies overlooking the work of the people who actually work with customers." What Abernathy fails to understand, amazingly, is that the actions of those of his ilk are the primary reason the United States and the world are currently under a huge, far-reaching recession. If his counterparts had not played Russian Roulette with risky investments and schemes, the world economy might not be in such dire straits.
Regulations must be in place. The CEOs simply can't be trusted to do the right thing, and they have proven that tenfold. The Volker Rule must be strong and force these financial leaders to be held accountable -- both criminally and financially.
Image: Wall & Broad St.
©2011 Reno Berkeley for Gather News.
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Comments: 4
That is very true. What is also true is that the government encouraged or even required lots of that risky behavior.
I doubt that you will see many if any go to jail, except for those on the outs with the powers that be.
Remember in August when S&P cut the credit rating down to AA for US long term debt. Two weeks later the DOJ announced they were investing S&P for improperly rating mortgage backed securities which led to the financial meltdown. Sounds more like a vengeful act by the administration. Moody's rated those securities also but, no downgrade, no investigation.