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WHILE WE SLEEP, OUR WORLD IS AT RISK – THE RETURN OF GLASS-STEAGALL (PART V)

December 29, 2013

elderblogger

WHILE WE SLEEP, OUR WORLD IS AT RISK – THE RETURN OF GLASS-STEAGALL – PART V

Fed Chairman Bernanke recently remarked with great fanfare that Section 619 (aka the Volcker Rule) of the Dodd-Frank Act had been finally adopted. The Rule, he announced, “has the important objective of limiting excessive risk taking by depository institutions and their affiliates.” Note the careful choice of words. He alludes only to “excessive risk,” and it is true that application of the Rule may limit taking of some excessive risk – but what is “excessive?” Unfortunately, Bernanke’s choice of words indicate a focus on only a small portion of the total risk available to “depository institutions and their affiliates,” not on the systemic risk that these banks not only remain “too big to fail;” but even “too powerful to fail.” Dodd-Frank did not give the Fed the authority to break up the big banks…

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