Volcker and Lewitt Drop Bombs on Financial Regulatory Reform

Will the financial regulatory reform truly change the Wall Street landscape and insure America never again experiences the economic crisis of the last few years? While we will likely see a number of our political operatives at 1600 Pennsylvania Avenue and on Capitol Hill waving flags and banging drums when the reform measures are inevitably passed, let’s listen to some political and financial insiders who have a different take on the reform measures.

Paul Volcker, former Fed chairman and current White House economic adviser, is clearly looking to clear his name prior to the passage of this reform. He spoke at length in an article released by The New York Times, Volcker Pushes for Reform, Regretting Past Silence.  Paul dropped the following bomb,

When it comes to interpreting the financial legislation, Mr. Volcker says he remains less than impressed. “We have to have a regulatory system that reflects today’s problems and tomorrow’s potential problems,” he says. “This bill attempts to do that. Does it do it perfectly? Obviously it does not go as far as I felt it should go.”

In a similar vein, the Financial Times addresses the upcoming financial regulatory reform in an article this morning. The FT’s John Plender writes, Tackling Anti-Social Financial Behavior,

On the topic of shareholder democracy, corporate governance and anti-social behaviour, I cannot do better than quote Michael Lewitt of Harch Capital Management on Dodd-Frank: “The financial reform bill that is emerging from Congress leaves so much essential work undone, and is so obviously a sell-out to special interests and expensive Wall Street lobbying efforts, that it can only be considered the latest example of all that is wrong with the American political system. In addition to leaving untouched the single biggest threat to financial stability – naked credit default swaps – it also fails to address the bleeding ulcers of Fannie Mae and Freddie Mac, ignores the deficiencies of the rating agencies and leaves most of the details of financial reform to be filled in by regulators, whose record in effectively doing their jobs is, to put it more politely than it deserves, pathetic.”

Mr Lewitt was prescient about the financial crisis. For my money, he is also on the mark here.

I would concur. We should not get overly comfortable thinking that this reform as drafted will necessarily prevent another crisis.

Navigate accordingly.

About Larry Doyle 522 Articles

Larry Doyle embarked on his Wall Street career in 1983 as a mortgage-backed securities trader for The First Boston Corporation. He was involved in the growth and development of the secondary mortgage market from its near infancy.

After close to 7 years at First Boston, Larry joined Bear Stearns in early 1990 as a mortgage trader. In 1993, Larry was named a Senior Managing Director at the firm. He left Bear to join Union Bank of Switzerland in late 1996 as Head of Mortgage Trading.

In 1998, after 15 years of trading and precipitated by Swiss Bank’s takeover of UBS, Larry moved from trading to sales as a senior salesperson at Bank of America. His move into sales led him to the role as National Sales Manager for Securitized Products at JP Morgan Chase in 2000. He was integrally involved in developing the department, hiring 40 salespeople, and generating $300 million in sales revenue. He left JP Morgan in 2006.

Throughout his career, Larry eagerly engaged clients and colleagues. He has mentored dozens of junior colleagues, recruited at a number of colleges and universities, and interviewed hundreds. He has also had extensive public speaking experience. Additionally, Larry served as Chair of the Mortgage Trading Committee for the Public Securities Association (PSA) in the mid-90s.

Larry graduated Cum Laude, Phi Beta Kappa in 1983 from the College of the Holy Cross.

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