Home » Behavioural Investing » Volcker Rule – Pigs at Trough or Good Risk Management $XLF, $C, $BAC, $JPM, $WFC, $AIG, $GS, $MS #Volckerrule

Volcker Rule – Pigs at Trough or Good Risk Management $XLF, $C, $BAC, $JPM, $WFC, $AIG, $GS, $MS #Volckerrule

The much debated Volcker Rule will be voted on by a series of regulatory agencies. essentially the rule in most part is a form of return to the old Glass Steagall system. Wall Street will still be allowed to take risks  But banks reliant on depositor funds and ultimately relying on Federal Government Deposit Insurance will no longer have the right to blow their financial brains out at the expense of depositors and the US tax payer.

Wall Street is still allowed to take risks and blow their brains out. Just use your own money or risk capital that knowingly accepts the risks and rewards.

US Chamber of Commerce and banking industry want to retain the lucrative side of hedging and risk which the Volcker rule wishes to separate. This allows them to absorb loses and stay in business. Take for example JPMorgan and the London Whale which apparently is a complete surprise to Jamie Dimon and the board of directors. If that was a private equity fund it may have gone bankrupt. In any event there would have been some very close questioning and not some shareholder dithering over who to vote for board director. Funds would have been withdrawn and vigorous lawsuits would have been launched.

The mood of the country is that of mistrust. Main street does not trust Wall Street. Tea Party supporters will find that while some voters mistrust government spending they do not want to back risk loving Wall Street Banks. The two dots do not connect.

You want to take risk. Go ahead. Just play with your own money. If you want to invest in risk invest directly. Blue Chip banks do not reward shareholders for the risks undertaken in hedges, prop trading and derivatives.

Perhaps management just does not want to be held accountable. The markets are volatile and its harder than it looks.

George Gutowski writes from a caveat emptor perspective.

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