Was watching CNBC this afternoon. Steve Liesman, the almost economist, was interviewing the deputy head of the IMF. By the way, do you know the deputy head is always an American while the managing director is always a Frenchman? You didn't? Now see what this blog does for you? Anyway, they were talking great thoughts such as global recovery and new financial regulation. Out of no where Liesman asked whether or not there was an issue as to whether greater financial regulation might interfere with global recovery. Indeed replied the deputy head and the politicians and regulators are aware of the risk. Now you don't think...I mean they couldn't ...would they...I mean is there a chance they read the Blog?Then again, maybe it's just a co-incidence. I wonder what these guys get paid for those great thoughts.
Anyway, M. Le President seems to have backed off a bit in his statement that he was prepared to walk out of the G-20 unless the position of La Republique in regard to compensation is adopted. I suspect that in the next week there is going to be a lot of backing off of previously held "firm positions" and "agreements in principal." After all, these are the least principled humans on the face of the earth save perhaps for the Congress of the United States. But in the end, they have an admittedly hard task. It wasn't made any easier by a speech made by paul Volker yesterday on the Left Coast calling for the prohibition of proprietary trading by commercial banks. He also spoke out in favor of the Fed as the regulator for financial institutions, greater leverage restrictions for non-commercial banks--read Goldman Sachs--higher capital requirements and against the sponsorship of hedge funds and private equity firms by commercial banks.
Over 20 years ago, Sen. Bill Bradley, who is a hell of a smart guy and a guy who loved to get out at the head of a parade, sponsored a very hush, hush meeting in Washington brought on by the Latin American financial crisis and the changes needed in bank regulation. All the major players from both an institutional and individual standpoint were present save one exception: your humble blogger who received an invitation from Sen. Bradley himself as a result of a conversation we had some weeks previous. No other banker agreed to show up. My institution thought me to be harmless I guess. I was was seated next to Alan Greenspan the spanking new Head of the Fed (who has terrible halitosis by the by...most unpleasant and uncomfortable) when his predecessor, Tall Paul launched into the very same speech he gave yesterday save for the hedge fund and private equity remarks there being...by God's good grace...none of them in existence at that time. I remember asking Paul why the hell he was singling out the commercial banks for all this new regulation when there were institutions like the Pru doing the same damn thing. Gruffly; "Yeah, yeah, you"re right." "And try to put a fence around them as well, wouldn't that lead someone else--somewhere else--doing the same thing?" says I? "Yeah, you're right," says my hero. I took a deep breath and turned to look at Greenspan. He never moved but stared silently ahead. Nothing came out of that meeting. 23 years ago.
As you know I feel Mr. Volker was bagged by this administration. He is testifying before Congress next week. Volker has always been the ultimate team player. For once, I hope he is not. He may not have been wrong 23 years ago, but undoing what brothers Rubin, Clinton and Bush did just 10 years ago may not be in the cards.
Have a nice weekend.
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