Volcker Trumps Geithner With Tough Bank Rules
Treasury Secretary's influence over Obama fading
By Kevin Spak, Newser User
Posted Jan 22, 2010 6:59 AM CST
Updated Jan 22, 2010 7:53 AM CST
President Barack Obama speaks about financial reform, Thursday, Jan. 21, 2010, at the White House.   (AP Photo/Charles Dharapak)

(Newser) – Paul Volcker scored a major victory yesterday as Barack Obama endorsed his proposal for tough new bank regulations over the objections of Tim Geithner. Obama even dubbed the proposal, which would prevent banks from making speculative investments that don't benefit their customers, the “Volcker Rule.” It’s a major sign that Geithner, who favors much milder reforms, is losing influence, the Washington Post reports.


Volker has argued publicly, for months, that big banks that provide the "core of the nation's credit and financial system" should not be allowed to engage in "highly risky entrepreneurial activity." His supporters are delighted. “This is a complete change of policy. It’s a fundamental shift … in a new and much more sensible direction,” one MIT professor tells the Washington Post. But the industry was predictably chaffed—they preferred Geithner’s less restrictive proposal to boost the banks’ required capital reserves. “His influence may have slipped,” says one senior industry official. “But you could also argue that it wasn't Geithner who lost power. The president needed Volcker politically” to look tough on banks.

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Showing 3 of 16 comments
cognitivefilter
Jan 22, 2010 10:46 AM CST
yeah hello. aren't we democrats. pipe down geithner
blues_junky
Jan 22, 2010 5:21 AM CST
I'd be all for it, too, PG.....but I highly doubt that's what's in play here. It was Congress that leaned on banks to lend money to people that wouldn't be able to pay it back, and ACORN protested outside of the banks that balked. Besides, Barney Frank, who absolutely refused to rein in Fannie and Freddie, is again making overtures about lowering lending standards to get people into homes they can't afford.....
PriorGuess
Jan 22, 2010 5:07 AM CST
Short memories and name calling...not very productive...Do you remember when banks were responsible for collecting the money they loaned? They were more careful in who they lent to because they wanted the money back. No "risky investment schemes". If that is what Volcker is talking about. I'm all for it.