By Rick Claypool and Bartlett Naylor
The Wall Street Journal’s Victoria McGrane reports:
The so-called Volcker Rule has broken the record for attracting the most comment letters submitted on any Dodd-Frank proposal.
Regulators have received a whopping 17,000-plus comments on the proposal, a Federal Reserve spokeswoman said. And some poor junior-level staffers are still counting them. The rule restricts U.S. banks from making bets with their own money.
More than 15,700 of those comments came from activists mobilized by Public Citizen’s online organizing efforts.
As the Washington Post observed, most submitted some version of the comment we provided, which called for implementation of a strong, simple Volcker Rule with few exceptions and swift penalties for violations.
The regulators receiving the messages were the Securities and Exchange Commission, Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation and the Board of Governors of the Federal Reserve.
The Volcker Rule is a provision of the Dodd-Frank Act that prohibits banks from operating as casinos, making bets with taxpayer-backed funds. Bankers won extravagant bonuses while inflating the housing bubble before inevitably crashing the financial system and the greater economy.
Thousands of Public Citizen supporters provided insightful comments with detailed examination of many banking corruptions, and documenting the human cost of this giant Ponzi scheme.
Many bring financial industry experience to bear. One supporter from New York explained that she “worked at Goldman Sachs for 12 years. [. . .] I know how this game is played. Big banks have no business gambling amounts of money that can destroy our economy. […] The only way to protect us from them is to write laws like the Volcker Rule, and it should remain without any loopholes whatsoever. Zero tolerance.”
Another supporter (from Arkansas) also writes with inside expertise:
As a Financial Products Specialist, I am urging you to support a strong version of the Volcker Rule. In fact, I contend we should go a little further and criminalize all uncovered speculation on any position. Had we just cut off all derivative contracts at that moment of financial collapse, we could have avoided the corporate welfare and taxpayer burden.
Many Public Citizen members detail the problem. A supporter from Kansas:
The three legged tripod of synthetic CDO’s, improper securities ratings, and credit default swap insurance had too much complexity built into the entire scheme to have been any kind of an accident with unintended consequences. This structure was purposely created and the risks were ignored in favor of freeing up investment capital (as well as generating capital that did not truly exist) to extend the capital leverage of investment houses to create even more havoc in the market. Meanwhile the risk to ordinary Americans was monumental and it seemed no one cared as long as the money kept rolling in the door.
A supporter from Delaware writes with important historical perspective:
I’m 85. I remember my father and my uncles talking about the Glass-Steagall Act and what a great thing it was to protect us from the dangers of speculative investments by banks. In the full flush of prosperity (for some) that law was repealed. A consequence was banks getting richer until we had a great recession. (I remember the Great Depression; it wasn’t pretty.) We need a strong Volcker Rule to protect us from the bandits again lousing up our economy. With sharp teeth and heavy punishment.
And many examine the human cost of bank speculation. Writes one Massachusetts supporter: “My husband and I lost our jobs and careers in the economic collapse of 2008 with a child in college, and we’re struggling to get back on our feet. Another such collapse would ruin us, and we did nothing to deserve this.”
These and more than 15,000 other comments will go far to counter the self-serving arguments submitted by the banking industry accustomed to normally exclusive communication with their government supervisors.
The deadline for submitting comments on the Volcker Rule is over. Now were turning up the pressure on the SEC to require corporations disclose their political activities.