Comment Text:
Striking the right balance on regulation is difficult, and the proposed rules must be monitored and reviewed to ensure that they help make our financial system more secure, but allow for our financial sector to remain competitive.
I support the Volcker Rule. A lesson we should have learned from the recent crisis and past ones such as the Savings and Loan mess, is that some regulation is necessary. In the recent crisis risk was supposedly dispersed via complex programs that were rated triple A, but the facts seem clear that regulators, those that desgned the products, and those that gave the high ratings, did not really understand the products nor fully appreciated the risks involved.
We should step back a bit and focus on basic services - keep it as simple as possible. Banks taking on greater risk / over leveraged, put the country and world at risk. In the case of the U.S. the burden fell on the average citizen in both funding the bailouts, but also suffering the negative consequences such as layoffs, foreclosures, etc. There is also the injustice of those who squeezed by and continued to make mortgage payments despite job loss or fear of job loss. Where is the bailout for these citizens? Did they receive a break on the interest rate, or a small reduction in the mortgage balance? No! In fact, it became more difficult to refinance, and if they had available credit in a home equity many received letters saying "Please continue making payments, but you cannot borrow on the available credit."
Banks need to have some restrictions placed on their ability to take risks. We have already set a precedence that failure will be covered by the taxpayer. As Paul Volcker points out, having institutions that engage in proprietary trading, also have open access to the federal safety net, will likely encourage more risk taking.
The Volcker rule also makes sense in that there is no guarantee that compensation that favors short term success will be changed, and that the recent crisis has pushed a number of institutions further into the category of "Too Big to Fail."
I also agree with Mr. Volcker's comments on competition. I do not believe that the rule will negatively hurt the banks, but will require watching. If I recall correctly, FDICIA was also supposed to hurt banks, and that did not turn out to be the case.
In summary, our financial institutions questionable practices have led to these rules, and I believe the proposals should be given a fair chance to see if they can make our financial system safer. And as stated above, the government should monitor and be open to addressing problems that might hurt our competiveness or are leading to inefficiencies in how banks serve customers.
Thank you for the chance to comment
Leo Burns
