I was wondering if Volker was still even in contact with the Obama administration. He was used on the campaign trail but then ignored by the White House geniuses such as Larry Summers. As in the Larry Summers who has steered the economic direction that we have today. Hmm. The good news is that Volcker is back in the picture and Obama will be promoting at least one of his ideas. Are we finally seeing serious change or is this only a trial balloon?
Mr. Obama's proposal is expected to include new scale restrictions on the size of the country's largest financial institutions. The goal would be to deter banks from becoming so large they put the broader economy at risk and to also prevent banks from becoming so large they distort normal competitive forces. It couldn't be learned what precise limits the White House will endorse, or whether Mr. Obama will spell out the exact limits on Thursday.
Mr. Obama is also expected to endorse, for the first time publicly, measures pushed by former Federal Reserve Chairman Paul Volcker, which would place restrictions on the proprietary trading done by commercial banks, essentially limiting the way banks bet with their own capital. Administration officials say they want to place "firewalls" between different divisions of financial companies to ensure banks don't indirectly subsidize "speculative" trading through other subsidiaries that hold federally insured deposits.
